Starting out in the rocking markets of 2006, L&T Tax Advantage Fund (formerly Fidelity Tax Advantage) delivered an impressive show until 2011, beating both benchmarks and the category average by comfortable margins. This earned it a 4-star rating in the first few years after launch. But the fund slipped behind the rest of the ELSS category between 2012 and 2014, resulting in its rating dipping to a more moderate 3 stars.

A very large-cap oriented fund until 2012, it has shifted to a more multicap orientation in the last 3 to 4 years. In the last year in particular, small-cap allocations have climbed to 14-18 per cent, higher than category, while mid-cap weights remain at 25 per cent or so with the rest in large-caps. The 3 year lock-in however gives sufficient time for such bets to pay off though. The portfolio has a growth bias, with a more defensive than cyclical positioning in recent months.

While the year to year returns of this fund may look patchy relative to the category, its overall 3, 5 and 7 year returns remain quite healthy, beating the benchmark by 3 to 7 percentage points. While relative returns did take a hit until 2014, the fund has managed the choppy markets of the last one year very well, with losses lower than both benchmark and category. This is very much in keeping with its past record of containing losses very well in falling markets, even if it doesn't blaze a trail in runaway bull markets.

The latest portfolio shows that the fund isn't making an all-out bet on economic recovery yet. It is underweight in financials, energy, autos and other core sectors while being overweight in cement, FMCG, technology and services. The stock choices in the small/mid-cap space are unconventional bets that demonstrate a wholly bottom-up approach.

Overall, a steady ELSS performer, especially for investors who hate downside.