Mutual Fund Review: Fidelity Tax Advantage

 

THOUGH rather unexciting, it's pretty much as d safe as you can get with h an equity play. t In its short history, it p has displayed a very aver 2 age performance during c bull runs but has flaunted great downside protection capabilities.

Interestingly, the latter is not the result of a t flight into cash. It's the a intrinsic nature of this e fund to be a conservative play. p Although the fund has p no market cap restrictions, it's biased towards s large cap stocks. More t over, it has always maintained a fairly decent exposure towards fast moving consumer goods o (FMCG) and healthcare, r both defensive sectors.

Since the maximum a allocation to a single c stock is 4 per cent, unless 1 the fund manager sees a 3 viable opportunity, the n outcome is a very diversified portfolio. Barring Reliance Industries (RIL), no stock has ever cornered more than 6 per cent of the portfolio. As of October 2009, the portfolio contained 69 stocks, a drop from 91 (in December 2007).

Apart from financial services, which have been the top sector of the fund almost since inception, exposure to any sector has never exceeded 16 per cent of the fund's portfolio. This fund manager will never get swayed by the momentum sectors.

So while the fund manager would get punished during short periods of time, in the long run, his stance pays off.

The three-year annualised return of 14.79 per cent (category average: 10 per cent) as of April 30, 2010, bears testimony to that.