Are we really selling the best ELSS funds?

deepdive08032018

One of the important responsibilities of financial intermediaries is to recommend the “best funds” in appropriate categories to their clients. What is the definition of “best”? Is it just long term performance track record? Does short term performance play a role? Does brand play a role? Does sales engagement of fund houses play a role?

Our Deep Dive series goes into in-depth analysis of comparing sales performance vs short and long term fund performance in different fund categories, to enable financial intermediaries to see for themselves whether they indeed are selling the “best funds” within each category.

Continuing our Deep Dive series on sales performance vs fund performance for different fund categories, we put a spotlight in this edition on ELSS funds (Click here for our Deep Dive analysis on equity oriented hybrids)

The methodology for this analysis has been shared in our inaugural edition of this Deep Dive series (Click here), so we now dive straight into the analysis. The period under consideration here is the last 12 months, ie March 2017 to February 2018.

Table 1: Open ended ELSS funds – Business performance vs fund performance

Click here to download excel file

                             
Fund Name Net Sales Net Sales Net Sales AuM AuM AuM Growth AuM Gr AuM Gr 1 yr fund performance 5 yr fund performance      
  Mar17-Feb18 Mkt Share Rank Feb-13 Feb-18 5 yrs Mkt Share Rank Return Rank Return Rank      
  12mth Rs Crs   Funds: 41         Funds: 41   Funds: 41   Funds: 33      
  Reliance Tax Saver (ELSS) Fund(G)               1,941 16.8% 1              1,945            10,345              8,400 15.3% 2 14.90 33 21.38 3      
  Axis LT Equity Fund(G)               1,672 14.5% 2                  478            16,161            15,683 28.5% 1 22.96 12 22.61 1      
  DSPBR Tax Saver Fund-Reg(G)               1,591 13.8% 3                  702              3,905              3,203 5.8% 6 15.46 28 19.81 10      
  Aditya Birla SL Tax Relief '96(G)               1,401 12.1% 4              1,416              5,032              3,617 6.6% 5 26.00 5 21.96 2      
  Sundaram Diversified Equity(G)                   888 7.7% 5              1,316              2,632              1,317 2.4% 10 16.22 27 16.44 24      
  Tata India Tax Savings Fund-Reg(G)                   551 4.8% 6                  122              1,219              1,097 2.0% 11 21.34 15          
  Mirae Asset Tax Saver Fund-Reg(G)                   517 4.5% 7                    864                  864 1.6% 13 24.47 10          
  L&T Tax Advt Fund-Reg(G)                   488 4.2% 8              1,117              2,989              1,872 3.4% 9 23.53 11 19.12 12      
  MOSt Focused Long Term Fund-Reg(G)                   435 3.8% 9                    852                  852 1.6% 14 27.68 4          
  ICICI Pru LT Equity Fund (Tax Saving)(G)                   417 3.6% 10              1,392              5,034              3,642 6.6% 4 12.33 37 18.01 17      
  IDFC Tax Advt(ELSS) Fund-Reg(G)                   385 3.3% 11                  151              1,084                  933 1.7% 12 29.83 3 20.80 6      
  Franklin India Taxshield(G)                   384 3.3% 12                  896              3,437              2,541 4.6% 7 12.39 36 17.88 18      
  SBI Magnum TaxGain'93-Reg(G)                   274 2.4% 13              4,382              6,431              2,049 3.7% 8 14.91 32 16.52 23      
  HDFC TaxSaver(G)                   174 1.5% 14              3,360              7,017              3,657 6.7% 3 14.93 31 16.83 22      
  DHFL Pramerica LT Equity Fund-Reg(G)                   126 1.1% 15                    222                  222 0.4% 24 17.95 25          
  Mahindra MF Kar Bachat Yojana-Reg(G)                     95 0.8% 16                    278                  278 0.5% 23 8.03 41          
  Aditya Birla SL Tax Plan(G)                     90 0.8% 17                  119                  683                  563 1.0% 17 25.60 6 21.17 4      
  Kotak Tax Saver Scheme(G)                     86 0.7% 18                  377                  717                  340 0.6% 21 12.21 38 15.98 27      
  Invesco India Tax Plan(G)                     53 0.5% 19                  130                  502                  372 0.7% 20 19.95 20 19.84 9      
  LIC MF Tax Plan(G)                     52 0.4% 20                    30                  158                  128 0.2% 27 20.51 16 16.31 25      
  UTI LT Equity Fund (Tax Saving)(G)                     49 0.4% 21                  446                  935                  489 0.9% 18 14.79 34 15.30 28      
  BOI AXA Tax Adv Fund-Reg(G)                     48 0.4% 22                    35                  145                  110 0.2% 28 34.17 2 19.26 11      
  BOI AXA Tax Adv-Eco(G)                     47 0.4% 23                    35                  145                  110 0.2% 29 35.29 1 20.09 8      
  Union Tax Saver Fund(G)                     43 0.4% 24                    47                  205                  159 0.3% 26 13.40 35 12.33 33      
  Baroda Pioneer ELSS 96(G)                     41 0.4% 25                    25                  132                  107 0.2% 30 15.03 30          
  Essel Long Term Advantage Fund-Reg(G)                     15 0.1% 26                      41                    41 0.1% 32 10.67 40          
  HDFC Long Term Adv Fund(G)                        6 0.1% 27                  812              1,583                  771 1.4% 15 19.08 21 17.80 19      
  Principal Tax Savings Fund                        4 0.0% 28                  205                  385                  180 0.3% 25 25.39 9 20.83 5      
  Sahara Tax Gain Fund(G)                      -2 0.0% 29                    11                      7                     -4 0.0% 38 10.79 39 14.72 32      
  Edelweiss Tax Advantage Fund-Reg(G)                      -3 0.0% 30                      4                    12                      8 0.0% 33 21.55 13 16.05 26      
  JM Tax Gain Fund(G)                      -4 0.0% 31                    32                    32                      0 0.0% 36 20.19 18 18.99 13      
  L&T Tax Saver Fund(G)                      -5 0.0% 32                    27                    30                      3 0.0% 34 20.31 17 20.35 7      
  Aditya Birla SL Tax Savings Fund(G)                      -5 0.0% 33                    25                    26                      2 0.0% 35 25.56 7 18.49 14      
  Edelweiss Long Term Equity Fund                       -5 0.0% 34                    12                    75                    63 0.1% 31 20.08 19 18.05 16      
  DHFL Pramerica Tax Plan(G)                      -8 -0.1% 35                    49                    45                     -4 0.0% 37 18.67 22 17.41 20      
  Taurus Tax Shield Fund-Reg(G)                    -15 -0.1% 36                    94                    52                  -42 -0.1% 40 25.53 8 15.17 29      
  IDBI Equity Advantage Fund-Reg(G)                    -16 -0.1% 37                    672                  672 1.2% 16 21.38 14          
  HSBC Tax Saver Equity Fund(G)                    -39 -0.3% 38                  186                  178                     -8 0.0% 39 17.45 26 18.09 15      
  BNP Paribas LT Equity Fund(G)                    -58 -0.5% 39                  120                  551                  430 0.8% 19 18.65 23 17.12 21      
  Principal Personal Tax saver Fund                    -62 -0.5% 40                  378                  310                  -68 -0.1% 41 15.18 29 14.97 30      
  Canara Rob Equity Tax Saver Fund-Reg(G)                 -117 -1.0% 41                  544                  857                  313 0.6% 22 18.54 24 14.86 31      
Total - Open Ended ELSS Funds             11,534 100%              21,020            75,980            54,961 100%                

Table 2: Open ended ELSS funds – Quarterly net sales analysis for last 12 months

Click here to download excel file

                           
Fund Name Mar 17 - May17     Jun 17 - Aug 17 Sept 17 - Nov 17 Dec 17 - Feb 18 Net Sales Net Sales Net Sales      
  Net Sales Mkt Share Net Sales Mkt Share Net Sales Mkt Share Net Sales Mkt Share Mar17-Feb18 Mkt Share Rank      
  Rs Crs   Rs Crs   Rs Crs   Rs Crs   12mth Rs Crs   Funds: 41      
  Reliance Tax Saver (ELSS) Fund(G) 798.57 23.2% 268.43 12.7% 282.26 13.0% 591.88 15.6%              1,941 16.8% 1      
  Axis LT Equity Fund(G) 574.44 16.7% 331.82 15.7% 330.79 15.2% 435.31 11.4%              1,672 14.5% 2      
  DSPBR Tax Saver Fund-Reg(G) 644.68 18.7% 272.93 12.9% 267.76 12.3% 406.05 10.7%              1,591 13.8% 3      
  Aditya Birla SL Tax Relief '96(G) 339.16 9.9% 197.12 9.3% 192.97 8.9% 671.49 17.7%              1,401 12.1% 4      
  Sundaram Diversified Equity(G) 106.11 3.1% 269.16 12.7% 262.84 12.1% 250.39 6.6%                  888 7.7% 5      
  Tata India Tax Savings Fund-Reg(G) 95.75 2.8% 78.25 3.7% 116.48 5.4% 260.14 6.8%                  551 4.8% 6      
  Mirae Asset Tax Saver Fund-Reg(G) 126.68 3.7% 114.66 5.4% 116.18 5.3% 159.22 4.2%                  517 4.5% 7      
  L&T Tax Advt Fund-Reg(G) 54.97 1.6% 106.68 5.0% 135.80 6.2% 190.14 5.0%                  488 4.2% 8      
  MOSt Focused Long Term Fund-Reg(G) 150.36 4.4% 91.85 4.3% 102.24 4.7% 90.96 2.4%                  435 3.8% 9      
  ICICI Pru LT Equity Fund (Tax Saving)(G) 171.98 5.0% 71.02 3.4% 72.43 3.3% 101.70 2.7%                  417 3.6% 10      
  IDFC Tax Advt(ELSS) Fund-Reg(G) 24.49 0.7% 18.05 0.9% 66.16 3.0% 276.31 7.3%                  385 3.3% 11      
  Franklin India Taxshield(G) 193.91 5.6% 78.60 3.7% 83.26 3.8% 28.56 0.8%                  384 3.3% 12      
  SBI Magnum TaxGain'93-Reg(G) -64.55 -1.9% 74.73 3.5% 68.86 3.2% 194.80 5.1%                  274 2.4% 13      
  HDFC TaxSaver(G) 19.97 0.6% 33.56 1.6% 32.71 1.5% 87.76 2.3%                  174 1.5% 14      
  DHFL Pramerica LT Equity Fund-Reg(G) 27.03 0.8% 30.74 1.5% 25.24 1.2% 42.79 1.1%                  126 1.1% 15      
  Mahindra MF Kar Bachat Yojana-Reg(G) 31.73 0.9% 17.91 0.8% 19.34 0.9% 25.57 0.7%                    95 0.8% 16      
  Aditya Birla SL Tax Plan(G) 30.18 0.9% 12.76 0.6% 17.22 0.8% 29.86 0.8%                    90 0.8% 17      
  Kotak Tax Saver Scheme(G) 46.58 1.4% 14.50 0.7% 8.28 0.4% 16.15 0.4%                    86 0.7% 18      
  Invesco India Tax Plan(G) 26.47 0.8% 12.00 0.6% 12.12 0.6% 2.35 0.1%                    53 0.5% 19      
  LIC MF Tax Plan(G) 14.00 0.4% 12.38 0.6% 9.24 0.4% 16.05 0.4%                    52 0.4% 20      
  UTI LT Equity Fund (Tax Saving)(G) 35.55 1.0% 31.05 1.5% 20.99 1.0% -38.17 -1.0%                    49 0.4% 21      
  BOI AXA Tax Adv Fund-Reg(G) 7.05 0.2% 8.04 0.4% 10.91 0.5% 21.54 0.6%                    48 0.4% 22      
  BOI AXA Tax Adv-Eco(G) 6.90 0.2% 7.86 0.4% 10.67 0.5% 21.24 0.6%                    47 0.4% 23      
  Union Tax Saver Fund(G) 12.29 0.4% 7.49 0.4% 7.36 0.3% 15.98 0.4%                    43 0.4% 24      
  Baroda Pioneer ELSS 96(G) 11.46 0.3% 9.12 0.4% 6.42 0.3% 13.63 0.4%                    41 0.4% 25      
  Essel Long Term Advantage Fund-Reg(G) 2.61 0.1% 8.05 0.4% 1.18 0.1% 3.54 0.1%                    15 0.1% 26      
  HDFC Long Term Adv Fund(G) 20.66 0.6% -1.67 -0.1% -13.85 -0.6% 1.06 0.0%                      6 0.1% 27      
  Principal Tax Savings Fund -0.85 0.0% 0.10 0.0% 0.32 0.0% 4.91 0.1%                      4 0.0% 28      
  Sahara Tax Gain Fund(G) -0.86 0.0% -0.47 0.0% -0.46 0.0% -0.49 0.0%                     -2 0.0% 29      
  Edelweiss Tax Advantage Fund-Reg(G) -0.45 0.0% -0.58 0.0% -0.76 0.0% -1.06 0.0%                     -3 0.0% 30      
  JM Tax Gain Fund(G) -1.01 0.0% -1.13 -0.1% -0.78 0.0% -1.02 0.0%                     -4 0.0% 31      
  L&T Tax Saver Fund(G) -1.07 0.0% -1.32 -0.1% -0.97 0.0% -1.18 0.0%                     -5 0.0% 32      
  Aditya Birla SL Tax Savings Fund(G) -2.09 -0.1% -0.77 0.0% -0.86 0.0% -0.84 0.0%                     -5 0.0% 33      
  Edelweiss Long Term Equity Fund  -2.19 -0.1% -2.28 -0.1% -0.89 0.0% -0.09 0.0%                     -5 0.0% 34      
  DHFL Pramerica Tax Plan(G) -2.55 -0.1% -1.62 -0.1% -1.62 -0.1% -1.99 -0.1%                     -8 -0.1% 35      
  Taurus Tax Shield Fund-Reg(G) -5.45 -0.2% -3.04 -0.1% -2.97 -0.1% -3.05 -0.1%                  -15 -0.1% 36      
  IDBI Equity Advantage Fund-Reg(G) 19.05 0.6% 1.32 0.1% -26.07 -1.2% -10.71 -0.3%                  -16 -0.1% 37      
  HSBC Tax Saver Equity Fund(G) -15.38 -0.4% -6.06 -0.3% -6.13 -0.3% -11.02 -0.3%                  -39 -0.3% 38      
  BNP Paribas LT Equity Fund(G) -4.70 -0.1% -10.19 -0.5% -11.82 -0.5% -31.49 -0.8%                  -58 -0.5% 39      
  Principal Personal Tax saver Fund -13.92 -0.4% -11.86 -0.6% -11.55 -0.5% -24.85 -0.7%                  -62 -0.5% 40      
  Canara Rob Equity Tax Saver Fund-Reg(G) -38.50 -1.1% -21.01 -1.0% -27.04 -1.2% -30.44 -0.8%                -117 -1.0% 41      
Total - Open Ended ELSS Funds 3439.04 100% 2118.17 100% 2174.26 100% 3802.97 100%            11,534 100%        

Observations

  • The most striking observation is that the two big equity champion fund houses – HDFC and ICICI Prudential, are relatively lowly placed in the business performance league tables, ranked at nos 10 (I Pru) and 14 (HDFC), with market shares that are significantly lower than their overall equity share. Their funds in the ELSS space don’t really stack up well in the performance league tables – a clear indication that performance + brand is what sells, not just brand alone. One would hope for fund performance to improve, as there continues to be substantial investor money flowing into these funds, even if they are not at the top of the sales league table.
  • Reliance has taken the top spot in sales performance, dislodging the reigning champion of the last 3 years, Axis. While its long term fund performance is strong, Reliance needs to monitor near term performance which has slipped. For it to maintain its pole position, this is one variable it perhaps needs to work on quickly.
  • DSP Blackrock’s ELSS fund coming in 3rd in business performance is at variance with its fund performance which are in 2nd and 3rd quartile on long and short term returns performance respectively.
  • Aditya Birla Sun Life’s ELSS fund is well positioned – top quartile on all 4 parameters – short and long term business performance and short and long term fund performance. It is in fact the only fund in this list that is in the top quartile on all 4 parameters. A truly well rounded performance.
  • Sundaram’s ELSS fund’s 5th position on business performance is at variance with its fund performance which is in 3rd quartile on short and long term returns performance league tables. A look at Table 2 – which provides a quarterly break up of sales numbers suggests that the fund house has been very active in mopping up money in the “off-season” months while others perhaps had their eyes on other categories, which explains why they have done very well on a 12 month basis. Food for thought for other fund houses.
  • FT and SBI’s ELSS products’ business performance is not currently matched by returns performance on short and long term measures – one would hope for these funds to perform better, to do full justice to investor money that’s going into them.
  • BoI and Principal seem to be the unsung heroes in the ELSS category – they have sound short and long term fund performance, but have been rewarded with disproportionately lower share of inflows into their funds.

We hope you find this Deep Dive into ELSS funds useful in terms of running a quick check into the products that are on your own recommended list, to determine funds you might want to look closer into to decide whether they ought to go into or out of your list. For fund houses, we hope this gives an objective analysis of how your funds stack up on a business vs fund performance comparison, to enable you to put more focus where you think this report is putting some pointers on.

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