Sundaram Tax Saver

Sundaram Tax Saver is managed by J Venkatesan and Srividhya Rajesh. The scheme aims at generating long term capital appreciation by investment in equity instruments. If you have already invested in this scheme, keep a close watch on its performance. New investors can safely skip this fund.

Where does Sundaram Tax Saver invest your money?

Sundaram Tax Saver is a multi cap fund which means most of your money will be invested in stocks of large, medium and small sized companies. About 53.25% of the fund’s money is allocated to stocks of large-sized companies, 41.06% to stocks of mid sized companies and close to 2.23% to those of small companies. Mid-sized stocks can give kicker returns as they turn into large stocks but this happens not so frequently. 

Suitable for what?
  • Saving on tax outgo
  • Child's education
  • Child's marriage
  • Planning for retirement
Not suitable for what?
  • Creating wealth
  • Lifestyle needs
How has Sundaram Tax Saver performed in the past?

If you had invested Rs 1 lakh when the fund was launched in Nov 1999, your value of investments would be around Rs 4.09 lakhs. If you had invested Rs 1 lakh for 5 years, your value of investments would be around Rs 1.27 lakhs. The performance has been to other mutual funds in this category. The fund has been giving around 5% returns for those who have stayed invested for 5 years. 

Assume you had invested Rs 10,000 every month in Sundaram Tax Saver through SIP for the past 5 years today you would have around Rs 7.62 lakhs.

How will Sundaram Tax Saver 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 do well. When the companies do well their stock prices follow their performance. So if you expect the economy to grow at 8% then you can expect top performing mutual funds to give you returns in excess of 14%.

Mutual fund schemes that have exposure to mid-sized companies tend to show results when their bet on few companies comes true. 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.

Our recommendation for fresh investment
Not Recommended
Our recommendation for existing investment
When to exit?

There is a lock-in period of 3 years on this fund, which means that you cannot sell this fund 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.

How frequently you need to monitor 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 are the charges applicable?

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.

If units are sold within a year an exit load of 1% is deducted from your total returns. No exit load applies for units withdrawn post one year. Expense ratio of Sundaram Tax Saver is 2.38%. 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.

What are the tax implications?

The returns in a mutual fund are absolutely tax free, provided you do not withdraw within 1 year. Sundaram Tax Saver 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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