MC30, a curated basket of 30 best mutual fund (MF) schemes, is finally here. But why 30 schemes? Because, at Moneycontrol, we feel that this is the ideal size for a fund universe from which you can build your own portfolio. After all, picking just 6-10 MF schemes (which is all what you need to build your own portfolio) from over 1,600 schemes out there is a daunting task. MC30 makes life simpler for you. Our carefully chosen schemes – which have gone through rigorous risk-return tests – are the ones you should be looking at, when you start building your own portfolio or are looking at rejigging your existing your portfolio.
Check out MC30 – our curated basket of 30 mutual fund schemes
But why are there just two tax-saving schemes in MC30?
A limited Section 80C window
Equity-Linked Saving Schemes (ELSS) give income-tax deduction benefits under Section 80C, up to a maximum limit of Rs 1.5 lakh. These funds come with a three-year lock-in.
But the Section 80C basket is crowded with Public Provident Fund (PPF), tax-saving bank fixed deposits, National Savings Certificates and Sukanya Samriddhi Yojana. Salaried employees can benefit from making contributions to the Employees’ Provident Fund (EPF) under Section 80C. Therefore, not everyone opts for ELSS.
New income tax regime does not include ELSS
Section 80C tax deduction benefits are only available to those who opt for the existing income-tax regime (higher rates, more deduction). If you opt for the new income-tax regime (lower taxes, lesser deductions), the Section 80C tax break is not available.
Also read: How to use MC30?
Let’s present our ELSS picks.
Canara Robeco Equity Tax Saver
Unlike its peers, Canara Robeco Equity Tax Saver Fund (CRETS) churns its holdings heavily. Its portfolio turnover ratio is 160 percent – far higher than the category’s 70 percent over the past three-year period.
Cheenu Gupta and Shridatta Bhandwaldar jointly manage this fund. When picking shares of companies, they focus on promoter integrity. The fund managers invest nearly 50 percent of the scheme’s corpus in companies they call ‘compounders.’ These are quality businesses that have consistently done well in the past, and are expected continue that way over the next 2-3 years. But they keep 25 percent aside for what they call alpha generators – companies that are cyclical or firms that are expected to do well because of changes in the business environment. They invest the remaining 25 percent in emerging businesses.
Also read: MC Methodology
Kotak Tax Saver
The good news about Kotak Tax Saver (KTS) is that it has been managed by Harsha Upadhyaya for more than seven years now.
Also read: How to use MC30?
Upadhyaya selects businesses with quality corporate governance, efficient capital allocation structure and those available at an attractive valuation. A three-year lock-in allows him to invest in fundamentally strong stocks, but those that could suffer from short bouts of volatility. He has invested around 55-60 percent of the scheme’s corpus in large-cap stocks and the rest in mid and small-cap shares.
Also see: The complete MC30 basket of mutual fund schemes
The scheme has done well in rising and falling markets.