Parag Parikh ELSS Tax Saver Fund Regular Growth INF879O01092

Parag Parikh ELSS Tax Saver Fund earns an Above Average Process Pillar rating.

The predominant contributor to the rating is the firm's retention rate of the firm's portfolio managers, which is 100% over the available data period, up to five years. Strong risk-adjusted performance also strengthens the process. This can be seen in the fund's five-year alpha calculated relative to the category index, which suggests that the managers have shown skill in their allocation of risk. However, the process is limited by the size of its portfolio management team, with five portfolio managers.

This strategy skews toward smaller, more value-oriented companies than its average peer in the ELSS (Tax Savings) Morningstar Category. Looking at additional factor exposure, this strategy has consistently favored high-quality stocks, including those with low financial leverage and solid returns on equity, compared with Morningstar Category peers during recent years. Though it may trail peers during an economic boom, this orientation contributes to helping it weather periods of economic stress better. In recent months, the strategy was more exposed to the Quality factor compared with its Morningstar Category peers as well. The managers have also tended to overweight yield during recent years, shown by the portfolio's high exposure to dividends or buybacks. Higher-yield stocks can provide steady income, but also have their risks. Dividend payers may cut payouts, for instance, if their earnings fall. Compared with category peers, the strategy also had more exposure to the Yield factor in the most recent month. In addition, the strategy had less exposure to high-liquidity stocks compared with Morningstar Category peers in recent months. Less-liquid stocks might offer strong returns to compensate for their risks, but they can be harder and more expensive to trade in bear markets. More information on a fund and its respective category's factor exposure can be found in the Factor Profile module within the Portfolio section.

The portfolio is overweight in technology and financial services relative to the category average by 7.4 and 6.0 percentage points, respectively. The sectors with low exposure compared with category peers are industrials and basic materials, underweight the average by 9.1 and 6.9 percentage points of assets, respectively. The portfolio is positioned across 50 holdings and is relatively concentrated. In particular, 56.0% of the fund’s assets are housed within the top 10 holdings, as opposed to the category’s 39.6% average. And in closing, in terms of portfolio turnover, on a year-over-year basis, 9% of the fund's holdings have changed, whether through increasing, decreasing, or changing a position.