Fidelity Tax Advantage Fund

Fidelity Tax Advantage fund is being managed by Sandeep Kothari. Investing in this fund enables the investors to avail the income tax rebate, as permitted from time to time.The fund manager is a bottom-up stock picker and only chooses stocks with strong valuation. It has never been the best performer in a stock market rally yet not among the worst in a downturn. This is a good fund to invest in for the long term.

Where does Fidelity Tax Advantage Fund invest your money?

Fidelity Tax Advantage fund is a large cap oriented equity fund which invests your money predominantly in stocks of large companies. Large cap companies tend to be stable compared to mid cap and small cap companies. Small and mid size companies have the potential to become large companies and when that happens you are expected to get bumper returns. This fund has 80% exposure to large cap stocks, 13% exposure to mid cap stocks and 7% exposure to small cap stocks. The portfolio is overweight in banking and financial services sector.


Suitable for what?

  • Child' s Education
  • Child's Marriage
  • Planning for Retirement
  • Buying a house 

Not Suitable for?
  • Creation of Wealth
  • Short term Needs
How much to invest?

Minimum one time investment is Rs 500 and minimum SIP is Rs 500 per month. Do not do the mistake of investing in too many mutual fund schemes. At any point of time do not have more than two mutual fund schemes in your core portfolio. Core portfolio is investments that are made for your basic goals. Fidelity Tax Advantage can be part of the core portfolio.

Our recommendation for fresh investment
Not Recommended
Our recommendation for existing investment
How has Fidelity Tax Advantage Fund performed in the past?

If you had invested Rs 1 lakh when the fund was launched in Jan 2006 the value of your investments would have been around Rs 2.1 lakhs. The performance has been better than other mutual funds in the same category. The fund has been giving at around 10% every year for those who stayed invested for last 5 years.

Assume you had invested Rs 10, 000 every month by way of SIP in this fund for the last five years the value of your investment today would be Rs 7.9 lakhs.

How will Fidelity Tax Advantage Fund perform in the future?

Needless to say no one can predict the future of markets. We have firm belief in the future prospects of the Indian economy. If the Indian economy grows at 9% then the leading companies tend to de well. When the companies do well their stock prices follows their performance. So if you expect the economy to grow at 9% then you can expect top performing mutual funds to give you returns in excess of 15%. We advise you to avoid too much of star gazing and future prediction.  Be reminded that equities are one of the asset classes that have the potential to beat inflation.  Your aim for core portfolio should be to beat inflation.

When to review the performance?

Once you invest in the fund do not get into the habit of checking the NAV daily or monthly. Review the performance once a year. Too much attention is not good.

What charges apply?

A onetime fee of Rs 100 is charged on investments over Rs 10, 000 made through distributors. If you are a first time investor in mutual funds an additional Rs 50 is charged to cover KYC expenses. This is deducted from your investment and can be skipped if you buy directly from the mutual fund via their website or offices.

No exit load applies for units withdrawn in this scheme. Expense ratio of Fidelity Tax Advantage Fund is 2.18%. This is charged to recover the fund management company’s expenses on securities’ transactions, commissions, registrar fees, etc. Your mutual fund returns will be total returns less expense ratio.

When to enter?

Now! There is no good time to invest rather than now. Do not try to time the market and especially so if it is an SIP. Do not follow news channel and other experts to know the right time to invest. In the long run it does not matter. Mutual fund is unlike a stock where you are looking at the right price. This job will be done by the mutual fund scheme manager. If you have planned your investments and decided on the amount you want to invest do not think further, just go ahead.

When to exit?

There is a lock-in period of 3 years on this fund, which means that you cannot sell these funds within 3 years of your purchase date.Withdraw when your goals are closer to achievement. Do not remove the money when the markets go up or down. Do not panic. Stick to your goals.

What are the tax implications?

The returns in a mutual fund are absolutely tax free, provided you did not withdraw within 1 year. Fidelity Tax Advantage qualifies for sec 80C ELSS benefits, which means you can invest up to Rs 1 lakh a year in this fund and deduct the amount from your gross total income for computing income tax.

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