Aditya Birla Sun Life Tax Relief 96 Fund Review: A smart choice to save tax

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This is a performance of Aditya Birla Sun Life Tax Relief 96 Fund, an ELSS mutual fund that qualifies for tax saving under section 80 C. In Jan 2019, I had featured this as one among the seven consistent ELSS performers Let us take an in-depth look at its performance.

Started in 1996 as a closed-ended fund, it became open-ended in 1999. However is NAV history is only available from March 2008 at both AMFI and the AMC site, I wonder why. At some point, I recall ABSL having three ELSS fund, one their own and two from other AMC acquisitions (or is two?). In any case, we do know for sure that Aditya Birla Sun Life Tax Plan was merged with Aditya Birla Sun Life Tax Relief 96 in May 2018. I have assumed here Tax Relief 96 is ABSL’s original ELSS offering. Please correct me if I am wrong. We need a dedicated mutual fund history page.

All ELSS funds should maintain 80% of stocks in their portfolio as per finance ministry regulation. There are more unusual aspects of these funds due to the tax benefits and lock-in of three years: Five Interesting Facts about ELSS Mutual Funds

Aditya Birla Sun Life Tax Relief 96 Fund Review A smart choice to save tax

Aditya Birla Sun Life Tax Relief 96 combines a top-down and bottom-up approach for stock selection. That is, it will not only choose profitable companies with a competitive advantage (bottom-up) but also consider macroeconomic factors, government policy etc (top-down) for portfolio construction.

Aditya Birla Sun Life Tax Relief 96 vs Nifty LargeMidcap 250: May 2019

Using the May 2019 Equity Mutual Fund Performance Screener, we can compare the Tax relief 96’s performance with Nifty Large Midcap 250. This index is a 50:50 mix of NIfty 100 and Nifty Midcap 150 indices. The fund has a benchmark of BSE 200. This (or is NSE equivalent NSE200) is fairly easy to beat. This is due to the market cap weighting of the index stocks. So the stocks with the top weight in Nifty 50 will also occupy the top spot in Nifty 200.  You can clearly see that in the picture below where 283 10-year returns (in each coloured lined) is plotted. This is the main reason I prefer Nifty LargeMidcap 250 to Nifty 200 for comparing ELSS, Multicap and Large and Midcap funds.

Nifty 200 vs Nifty 50 vs Nifty Largemidcap 250Aditya Birla Sun Life Tax Relief 96 Fund has a good long-term track return record against all these indices. Notice how the quantum of outperformance has decreased remarkably when the benchmark is changed from NSE 200 to NSE LargeMidcap 250.

Aditya Birla Sun Life Tax Relief 96 Fund vs bemchmark indices ten year rolling returnIn term of risk, Aditya Birla Sun Life Tax Relief 96 is less volatile than NSE 200 or Nifty 50 and comparable to Nifty Large Midcap 250.

Aditya Birla Sun Life Tax Relief 96 Fund vs bemchmark indices ten year rolling riskIndex fund naysayers must recognise that a simple 50:50 blend of a large cap and midcap index is able to match the performance of one the consistent performers in the ELSS categories. Not just recently but since April 2006.

Screener Results for Aditya Birla Sun Life Tax Relief 96

Aditya Birla Sun Life Tax Relief ’96 – Growth – Direct Plan is the only ELSS fund (and plan) to have beat the NiftyLargeMidcap250 Index 70% of the time or more, over 1,2,3,4 and 5 years! Also, in the  May 2019 Active Mutual Fund Performance Report only 8/31 funds qualified for risk, reward performance consistency over 5 years. This fund is one of them. The full stats are given below.

No of rolling return entries Index (1 Year)1318
No of rolling return entries Fund (1 year)1318
No of times fund has outperformed index (1 year)964
rolling return outperformance Consistency Score (1 year)73%
No of rolling return entries Index (2 Years)1070
No of rolling return entries Fund (2 years)1070
No of times fund has outperformed index (2 years)777
rolling return outperformance Consistency Score (2 years)73%
No of rolling return entries Index (3 Years)824
No of rolling return entries Fund (3 years)824
No of times fund has outperformed index (3 years)752
rolling return outperformance Consistency Score (3 years)91%
No of rolling return entries Index (4 Years)579
No of rolling return entries Fund (4 years)579
No of times fund has outperformed index (4 years)576
rolling return outperformance Consistency Score (4 years)99%
No of rolling return entries Index (5 Years)337
No of rolling return entries Fund (5 years)337
No of times fund has outperformed index (5 years)337
rolling return outperformance Consistency Score (5 years)100%

This fund also has acceptable downside protection consistency. That is when the index falls, it tends to fall less.

downside protection consistency (1 year)58%
downside protection consistency (2 years)68%
downside protection consistency (3 years)73%
downside protection consistency (4 years)76%
downside protection consistency (5 years)94%

It is also one of the rare funds to have a good upside performance consistency too! When the index moves up, it tends to move up higher.

upside performance consistency (1 years)46%
upside performance consistency (2 years)85%
upside performance consistency (3 years)83%
upside performance consistency (4 years)97%
upside performance consistency (5 years)100%

Summary

I think Aditya Birla Sun Life Tax Relief 96 Fund is an excellent choice of saving tax IF, repeat IF you want such benefits Remember there is no need to for ELSS funds. You can use EPF + VPF, PPF, mandatory NPS, expenses like life insurance, tuition fee for kids and home loan EMI (as applicable). Read more:  Making the best use of section 80C for tax saving: an example

If in spite of all this, you still feel the itch to buy ELSS funds, you can consider this. However do not fall prey to the distributor mis-sell that ELSS mutual fund performance is linked to the lock-in of the fund: The Myth About ELSS Fund Lock-in

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About the Author M Pattabiraman author of freefincal.comM. Pattabiraman(PhD) is the author and owner of freefincal.com.  He is an associate professor at the Indian Institute of Technology, Madras since Aug 2006. Pattu” as he is popularly known, has co-authored two print-books, You can be rich too with goal based investing (CNBC TV18) and Gamechanger and seven other free e-books on various topics of money management.  He is a patron and co-founder of “Fee-only India” an organisation to promote unbiased, commission-free investment advice. Pattu publishes unbiased, promotion-free research, analysis and holistic money management advice. Freefincal serves more than one million readers a year (2.5 million page views) with numbers based analysis on topical issues and has more than a 100 free calculators on different aspects of insurance and investment analysis. He conducts free money management sessions for corporates  and associations(see details below). Previous engagements include World Bank, RBI, BHEL, Asian Paints, TamilNadu Investors Association etc. Contact information: freefincal {at} Gmail {dot} com (sponsored posts or paid collaborations will not be entertained)
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1 Comment

  1. Hi Pattu Sir, Aditya Birla Sun Life Tax Plan is not merged into Aditya Birla Sun Life Tax Relief 96. It is just not accepting new investments. I am an invester in Aditya Birla Sun Life Tax Plan and i still hold its units.

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