After a difficult patch in its initial years between 2006 and 2008, this fund has come into its own in the last five years. With a particularly good run since 2014, it has climbed to a four-five-star rating in this period. Though most funds in the ELSS category follow a multi-cap approach, Reliance Tax Saver has an even higher allocation to mid- and small-cap stocks than the category. The mandate allows a 40-60 per cent allocation to large caps. But in practice, in the last two years, the large-cap exposure has hovered between 25 and 40 per cent. The fund also sets aside 20-30 per cent of the portfolio for multinational companies with robust fundamentals. The fund follows a blend of growth and value investing.

The fund's three-, five- and even seven-year returns are ahead of the benchmark by 8-12 per cent. This is helped a great deal by the fund's runaway returns in 2014 when it made more than twice the benchmark returns. The focus on quality plays and MNCs helped it capture outperformance by this segment. The higher allocation to small and mid caps relative to the category also helped returns. In 2015, the portfolio focused on domestic recovery plays like capital goods, autos, finance, while avoiding FMCGs and non-durables. Overall, the fund has fared better in tearaway bull markets than in bearish markets.

This is an aggressive fund to own in the ELSS space. Risks could be higher due to the mid- and small-cap tilt than those in the category.