iStockI have been investing in ABSL Tax Relief 96 Fund for the last two years through SIPs and lumpsum. The scheme has a larger share of its portfolio in mid cap and small cap stocks than large cap stocks. How much volatile can this fund be? What should I do?
-Sharang Khandelwal
Aditya Birla Sun Life Tax Relief 96 Fund is one of the top long-term performers in the ELSS or tax saving mutual fund category. You are right about the scheme's higher exposure to mid and small cap stocks.The scheme has a combined exposure of around 56% in these stocks. ABSL Tax Relief 96 Fund is part of our recommended tax saving mutual funds. And we have been stating that the scheme has been underperforming a for a while because of its large exposure to mid can and small cap stocks. Though the scheme managed to cut down on its small cap exposure, it still has a large exposure to mid cap stocks. This can result in underperformance and volatility in the short period, as mid cap segment is likely to be depressed till there is a revival in the stock market.
However, the strategy would also help the scheme to earn higher returns when there is a revival in the mid cap stocks. You have not mentioned when you started investing, what is your investment horizon, and risk profile. If you have a very long-term investment horizon and the necessary risk profile, you may hold on to your investments in the scheme. If you do not have the necessary risk appetite and horizon, you may stop your investments in the scheme and wait for the lock-in period to get over (and if possible wait for the revival of the market) to sell your investments.
-Sharang Khandelwal
Aditya Birla Sun Life Tax Relief 96 Fund is one of the top long-term performers in the ELSS or tax saving mutual fund category. You are right about the scheme's higher exposure to mid and small cap stocks.The scheme has a combined exposure of around 56% in these stocks. ABSL Tax Relief 96 Fund is part of our recommended tax saving mutual funds. And we have been stating that the scheme has been underperforming a for a while because of its large exposure to mid can and small cap stocks. Though the scheme managed to cut down on its small cap exposure, it still has a large exposure to mid cap stocks. This can result in underperformance and volatility in the short period, as mid cap segment is likely to be depressed till there is a revival in the stock market.
However, the strategy would also help the scheme to earn higher returns when there is a revival in the mid cap stocks. You have not mentioned when you started investing, what is your investment horizon, and risk profile. If you have a very long-term investment horizon and the necessary risk profile, you may hold on to your investments in the scheme. If you do not have the necessary risk appetite and horizon, you may stop your investments in the scheme and wait for the lock-in period to get over (and if possible wait for the revival of the market) to sell your investments.
(If you have any mutual fund queries, message us on ET Mutual Funds on Facebook. We will get it answered by our panel of experts.)
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