Franklin India Taxshield-Growth: Know Why It’s a Great Performer

Franklin India Taxshield-Growth: Know Why It’s a Great Performer

Feb 27, 2018

Why should you be interested in this fund?

  1. Franklin India Taxshield-Growth is an Equity Linked Savings Scheme or ELSS, which is a great investment avenue if you are looking to save tax. If you invest in this fund, you get a tax deduction for up to 1.5 lakh of investment. And this is permissible under section 80 C of the Income Tax Act of 1961. But you get this benefit over a lock in period of 3 years.
  2. Franklin maintains a portfolio across different companies having varying sizes and belonging to a lot of different sectors. And this enables it to provide long term capital appreciation benefits to its investors.
  3. If you remain invested in this scheme for more than a year, then you won’t be levied any long-term capital gains (LTCG) tax.
  4. The Dividend Distribution Tax levied on the declared dividends is zero. In fact, the dividends themselves are tax free.
  5. For your investments to qualify for tax benefits under section 80 C, they must be equal to or less than INR 1.5 lakhs. But this is subject to a lock in period of three years.

The companies in which the scheme has its money parked -

The best 10 sectors and companies in which the fund has its money parked as on 30th November, 2017 are Power Grid Corp. of India Ltd. from the utilities sector; Hindustan Unilever Ltd., a household & personal products company; HDFC Bank Ltd., a banking firm; the automobiles & components company Mahindra & Mahindra Ltd.; Indian Oil Corp. Ltd., operating under the energy sector; the Bharti Airtel Ltd., a telecommunication services company; and other banks like State Bank of India, Kotak Mahindra Bank Ltd., Axis Bank Ltd., and Yes Bank Ltd.

Is there an ideal investment horizon for this scheme?

Well yes, the company recommends an investment horizon of five years and above for this scheme.

About the fund -

The main aim of Franklin India Taxshield-Growth is to offer long-term capital appreciation along with income tax benefits. The scheme mainly exposes your money to equities. The money also remains parked in money market instruments and PSU bonds and debentures. If you want to invest in this fund then the minimum amount with which you can start investment is INR 500.

Now, let’s have a look at the scheme’s performance over the years since its inception. In the first year of the scheme’s advent, the scheme offered a return of 28.8% against the return offered by other comparable Equity Linked Savings Schemes (ELSS) in the market. In the third year of the scheme’s inception, it gave a return percentage of 12.62 as opposed to 14.65% offered by its counterparts. In the fifth year, the returns remained comparable for both the categories - while the Franklin scheme offered around 18.59% return, other similar funds in the market gave 18.71%. In the tenth year, Franklin outdid other comparable funds - while it gave a return of 11.79%, other funds in the market gave only 9.04%. So, the overall since-launch return for the Franklin scheme is 24.01% and that for other similar funds in the market is 17.39%.

Source: Swaraj Wealth Research

If you now look at the yearly performance of the scheme that takes into account the time period between 2012 and 2016, you will see that the scheme’s performance slightly dipped in the year 2012 and 2013 as compared to the performance given by other comparable funds in the market. However, it geared up its performance and in 2014, the scheme outperformed other comparable funds in the market by a good margin. In 2015, the scheme’s performance and the market average remained almost comparable. And in 2016, it offered a return of 4.72% which is indeed impressive.

Source: Swaraj Wealth Research

Now that we have seen how consistently the scheme performed ever since its inception, there is no reason why you shouldn’t invest in it. it’s a good scheme; and is, in fact, one of the top performing Equity Linked Savings Scheme in the market. If you think ELSS is a reliable investment option, and is in sync with your financial goals, then you must invariably invest in this investment avenue. And what better scheme to make investment than in Franklin India Taxshield-Growth.

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