Reasons Why You Should Not yet Give up on Reliance Tax Saver Fund

Reliance Tax Saver Fund has been losing its ratings in recent years and the majority of the investors are concerned regarding the continuation of SIPs. A severe underperformance has been witnessed in the last 2-3 years for tax saving scheme of Reliance Mutual Fund. Although, redemption at the current level is not a clever choice and informed investors can handle the situation in a better way. Experts at MySIPonline have analysed the situation along with all the possible choices for the investors.

About the Scheme

Reliance Tax Saver Fund is an aggressive scheme in the ELSS category which aims to deliver higher capital appreciation to the investors in the long term. The fund allows tax deductions under section 80C and the investors can reduce the tax liability by up to Rs 46,800 every financial year by investing in Reliance Tax Saver Fund Growth. The fund manager Mr Ashwani Kumar uses aggressive investment strategy by allocating a higher proportion of the corpus in the mid and small-cap stocks. Among the ELSS category, it has the highest allocation in the mid and small-cap segment. In the last few years, the investment strategy hasn’t been much productive for the scheme and many investors have been moving out of the scheme following the downgrade in the ratings. Investors must consider the following factors before making any decision regarding investments.

1. Market Has Been UnfriendlyIn recent years, the mid and small-cap stocks have been unable to perform well and deliver the desired outputs. The market conditions have not been favouring the mid and small cap industries. This effect can be directly seen on the performance of Reliance Tax Saver Fund in which more than 40% of the corpus is invested in mid and small cap stocks. 
2. It has a Long Term OutlookReliance Tax Saver Fund aims for greater capital appreciation in the long tenure of more than 7 years and investments must be done for the long term. The short term volatility should not be considered while making investments in the fund. It has an aggressive portfolio and can be volatile in the short term. 
3. It has the Highest Return Generating AbilitiesDue to higher allocation in the mid and small-cap stocks, the fund has the ability to deliver the highest gains in the category if the market conditions are friendly for the small and mid-cap stocks.
4. Lower Expense RatioReliance Tax Saver Fund charges a lesser expense ratio than most of the schemes in the ELSS Category. 
5. Superior Track RecordReliance Tax Saver Fund has beaten peers as well as benchmark in the long term and has been chosen by a large number of investors. It has a gigantic AUM and has performed well under favourable market conditions. 

Advice for the Investors

Reliance Tax Saver Fund is suffering from prolonged negative market conditions and redemption at current levels must be avoided. Those investors who cannot take a higher risk can stop their SIPs and wait for the lock-in period to complete while for the adventurous investors, it can be an ideal tax saving scheme.

Reliance Tax Saver Fund is currently not performing well but has the ability to generate the highest returns in the category. To know more about the scheme or to clear any query regarding investments in mutual funds, connect with the financial experts at MySIPonline.