HDFC Long Term Advantage Fund Vs HDFC Tax Saver Fund

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.

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.

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.

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.

Growth of 10k Investments over the years