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Fincash » HDFC Long Term Advantage Fund Vs HDFC Tax Saver Fund

HDFC Long Term Advantage Fund Vs HDFC Tax Saver Fund

Updated on January 23, 2020 , 566 views

HDFC Long Term Advantage Fund and HDFC tax saver Fund both the schemes are offered by HDFC Mutual Fund under ELSS category. In simple terms, ELSS are the Mutual Fund schemes that invest their accumulated money predominantly in equity and equity-related instruments. These schemes invest around 80% of the corpus money in equity-oriented schemes. However, one of the characteristics that make ELSS stand apart from other equity-oriented schemes is that it offers dual benefits of investing and tax deduction. Individuals Investing in ELSS can claim a tax deduction of up to INR 1,50,000 under Section 80C of Income Tax Act, 1981. However, ELSS has a lock-in period of three years. Though both the schemes are offered by the same fund house and in the same category, yet they differ on various parameters. So, let’s understand these differences through this article.

HDFC Long Term Advantage Fund

HDFC Long Term Advantage Fund is suitable for individuals seeking for capital appreciation over long-term by predominantly investing in equity and equity-related instruments. The risk-appetite of HDFC Long Term Advantage Fund is moderately high and was incepted on January 02, 2001. HDFC Long Term Advantage Fund uses S&P BSE Sensex as its benchmark index to construct its portfolio. Based on the Asset Allocation objective of the scheme, it invests around 80% of its fund in equity instruments while the remaining in fixed income instruments. The investment approach of HDFC Long Term Advantage Fund is based on five principles that include long-term focus, maintaining a margin of safety, disciplined approach to selling, maintaining a balanced outlook on the market, and investments confer proportionate ownership.

NOTE: THIS FUND HAVE STOPPED ACCEPTING NEW INVESTMENTS FROM JULY 2018 onwards as per SEBI regulation changes dated April 2018.

HDFC Tax Saver Fund

HDFC Tax Saver Fund’s investment objective is to attain capital growth in the long-term tenure. This open-ended ELSS scheme uses Nifty 500 Index and Nifty 50 Index as its benchmark to build its portfolio. Mr. Rakesh Vyas and Mr. Vinay R. Kulkarni jointly manage HDFC Tax Saver Fund. As on March 31, 2018, some of the top constituents of HDFC Tax Saver Fund’s portfolio include HDFC Bank Limited, Reliance Industries Limited, GAIL (India) Limited, Infosys Limited, Tata Steel Limited, and Cipla Limited. Based on the asset allocation objective, HDFC Tax Saver Fund invests minimum 80% of its accumulated fund money in equity instruments and a maximum 20% of its fund money in fixed income instruments.

HDFC Long Term Advantage Fund Vs HDFC Tax Saver Fund

HDFC Long Term Advantage Fund and HDFC Tax Saver Fund differ on a number of parameters. So, let us understand these differences between the schemes that are classified into four sections, namely, basics section, performance section, yearly performance section, and other details section.

Basics Section

It is the first section in the comparison of the schemes. The comparable parameters forming part of the basics section include current NAV, Fincash Rating, scheme category, and much more. To begin with the scheme category, it can be said that both the schemes belong to the same category of Equity ELSS. On the basis of Fincash Rating, it can be said that HDFC Long Term Advantage Fund is a 3-Star rated scheme and HDFC Tax Saver Fund is a 2-Star rated scheme. With respect to the NAV comparison, it can be said that both the schemes differ significantly. As on May 02, 2018, the NAV of HDFC Long Term Advantage Fund was approximately INR 342, while of HDFC Tax Saver Fund was around INR 514. The summary of the basics section is as follows.

Parameters
BasicsNAV
Net Assets (Cr)
Launch Date
Rating
Category
Sub Cat.
Category Rank
Risk
Expense Ratio
Sharpe Ratio
Information Ratio
Alpha Ratio
Benchmark
Exit Load
HDFC Long Term Advantage Fund
Growth
Fund Details
₹379.367 ↑ 0.84   (0.22 %)
₹1,399 on 31 Dec 19
2 Jan 01
Equity
ELSS
23
Moderately High
2.17
0.56
-0.9
-6.36
Not Available
NIL
HDFC Tax Saver Fund
Growth
Fund Details
₹525.007 ↑ 2.17   (0.42 %)
₹7,454 on 31 Dec 19
31 Mar 96
Equity
ELSS
27
Moderately High
2.12
0.09
-1.03
-5.57
Not Available
NIL

Performance Section

Being the second section in the comparison, it analyzes the differences in the CAGR returns of both the schemes. These CAGR returns are compared at different time intervals such as 1 Year Return, 3 Year Return, 5 Year Return, and Return since Inception. The comparison of performance section reveals that in almost all the instances, HDFC Long Term Advantage Fund has performed better. The table given below summarizes the comparison of the performance section.

Parameters
Performance1 Month
3 Month
6 Month
1 Year
3 Year
5 Year
Since launch
HDFC Long Term Advantage Fund
Growth
Fund Details
1.4%
7.5%
7%
11.6%
12.2%
9%
21%
HDFC Tax Saver Fund
Growth
Fund Details
1.9%
6.1%
4.6%
6.6%
7%
4.6%
0%

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Yearly Performance Section

Being the third section in the comparison, it analyses the differences in the absolute returns of both the schemes for a particular year. The comparison of absolute returns section states that, in certain years, HDFC Long Term Advantage Fund leads the race and in others, HDFC Tax Saver Fund leads the race. The summary of yearly performance section is tabulated as follows.

Parameters
Yearly Performance2019
2018
2017
2016
2015
HDFC Long Term Advantage Fund
Growth
Fund Details
10.1%
-3.9%
36.2%
13%
-2.4%
HDFC Tax Saver Fund
Growth
Fund Details
3.7%
-10.9%
38.7%
7.6%
-6.2%

Other Details Section

It is the last section in the comparison that includes elements such as AUM, minimum SIP and lumpsum investment, and exit load. The minimum SIP and lumpsum amount for both the schemes is same, that is, INR 500. In addition, both the schemes also do not have any exit load as they are a part of ELSS schemes and have a lock-in period of three years. Nevertheless, both the schemes differ on account of AUM. As on March 31, 2018, the AUM of HDFC Tax Saver Fund was around INR 6,656 Crores while of HDFC Long Term Advantage Fund was around INR 1,515 Crores. The table given below summarizes the comparison of other details section.

Parameters
Other DetailsMin SIP Investment
Min Investment
Fund Manager
HDFC Long Term Advantage Fund
Growth
Fund Details
₹500
₹500
Chirag Setalvad - 12.51 Yr.
HDFC Tax Saver Fund
Growth
Fund Details
₹500
₹500
Vinay Kulkarni - 12.87 Yr.

Growth of 10k Investments over the years

Growth of 10,000 investment over the years.
HDFC Long Term Advantage Fund
Growth
Fund Details
DateValue
31 Dec 14₹10,000
31 Dec 15₹9,760
31 Dec 16₹11,030
31 Dec 17₹15,023
31 Dec 18₹14,437
31 Dec 19₹15,896
Growth of 10,000 investment over the years.
HDFC Tax Saver Fund
Growth
Fund Details
DateValue
31 Dec 14₹10,000
31 Dec 15₹9,376
31 Dec 16₹10,085
31 Dec 17₹13,984
31 Dec 18₹12,454
31 Dec 19₹12,919

Detailed portfolio Comparison

Asset Allocation
HDFC Long Term Advantage Fund
Growth
Fund Details
Asset ClassValue
Cash4.21%
Equity95.79%
Equity Sector Allocation
SectorValue
Financial Services35.32%
Industrials18.55%
Energy13.48%
Technology10.37%
Basic Materials5.49%
Consumer Defensive5.07%
Consumer Cyclical2.16%
Utility2.1%
Communication Services1.64%
Health Care1.62%
Top Securities Holdings / Portfolio
NameHoldingValueQuantity
ICICI Bank Ltd (Financial Services)
Equity, Since 31 Oct 09 | ICICIBANK
10%₹138 Cr2,690,000
↓ -160,000
HDFC Bank Ltd (Financial Services)
Equity, Since 30 Jun 13 | HDFCBANK
10%₹137 Cr1,078,000
Reliance Industries Ltd (Energy)
Equity, Since 31 Jul 05 | RELIANCE
10%₹136 Cr875,000
↓ -57,000
Infosys Ltd (Technology)
Equity, Since 30 Nov 06 | INFY
7%₹101 Cr1,453,908
Housing Development Finance Corp Ltd (Financial Services)
Equity, Since 31 Oct 08 | HDFC
7%₹92 Cr400,000
State Bank of India (Financial Services)
Equity, Since 31 Jan 03 | SBIN
6%₹89 Cr2,600,000
Larsen & Toubro Ltd (Industrials)
Equity, Since 31 Oct 07 | LT
6%₹81 Cr607,500
ITC Ltd (Consumer Defensive)
Equity, Since 31 Oct 05 | ITC
5%₹70 Cr2,822,910
Treps - Tri-Party Repo
CBLO/Reverse Repo | -
4%₹57 Cr
Bharat Petroleum Corp Ltd (Energy)
Equity, Since 30 Sep 12 | 500547
4%₹51 Cr1,000,000
Asset Allocation
HDFC Tax Saver Fund
Growth
Fund Details
Asset ClassValue
Cash4.03%
Equity95.86%
Other0.11%
Equity Sector Allocation
SectorValue
Financial Services29.4%
Utility15.1%
Energy14.56%
Industrials11.86%
Technology8.64%
Basic Materials6.03%
Consumer Defensive4.08%
Health Care3.59%
Consumer Cyclical1.56%
Communication Services1.03%
Top Securities Holdings / Portfolio
NameHoldingValueQuantity
ICICI Bank Ltd (Financial Services)
Equity, Since 31 Oct 09 | ICICIBANK
10%₹739 Cr14,424,815
↓ -100,000
State Bank of India (Financial Services)
Equity, Since 31 Dec 06 | SBIN
8%₹591 Cr17,288,400
HDFC Bank Ltd (Financial Services)
Equity, Since 31 Mar 15 | HDFCBANK
7%₹543 Cr4,261,000
NTPC Ltd (Utilities)
Equity, Since 30 Nov 16 | 532555
7%₹523 Cr44,967,133
Reliance Industries Ltd (Energy)
Equity, Since 31 Jan 15 | RELIANCE
7%₹503 Cr3,244,500
↓ -500,000
Bharat Petroleum Corp Ltd (Energy)
Equity, Since 30 Sep 08 | 500547
6%₹449 Cr8,776,700
Larsen & Toubro Ltd (Industrials)
Equity, Since 31 Jul 12 | LT
6%₹427 Cr3,211,441
Infosys Ltd (Technology)
Equity, Since 30 Sep 08 | INFY
6%₹415 Cr5,965,786
Treps - Tri-Party Repo
CBLO/Reverse Repo | -
4%₹318 Cr
ITC Ltd (Consumer Defensive)
Equity, Since 30 Apr 18 | ITC
4%₹304 Cr12,334,848
↑ 1,000,000

Therefore, based on the above-mentioned pointers, it can be said that there are numerous differences between the schemes though they are part of the same category. As a result, individuals should be careful while investing in any of the schemes. They should ensure whether the scheme’ objective matches with their objectives or not. Also, they should understand the modalities of the scheme completely. This will help the individuals to attain their objectives on time and in a hassle-free manner.

Disclaimer:
All efforts have been made to ensure the information provided here is accurate. However, no guarantees are made regarding correctness of data. Please verify with scheme information document before making any investment.
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Naveen, posted on 7 Jan 20 3:21 PM

very good information

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