Despite a miserable past, Magnum Taxgain has done well. Though relegated from a five- to a four-star rating in October, this fund has been able to beat the category for the past three years consistently.

In the three-year period ended December 19, 2006, its 65.23 per cent annualised return was well above the 36.32 per cent gain of the category. Its year-to-date returns (till December 19) of 38.13 per cent have also been much more than the average peers' 25.53 per cent.

If we talk of quarterly returns, for the September quarter again the returns were good at 16.38 per cent, more than the category's average of 14.95 per cent.

Apart from generating good returns, the fund is learning to manage the market crashes. In the June quarter, the fund lost just 11 per cent compared with the category's loss of 15.35 per cent though historically it had lost more than category averages in the bearish markets.

Since January this year, the fund had been mopping up large-cap stocks slowly. Small caps, which used to consume over half of its assets about a year and half ago, now account for just over 11 per cent of its assets. The fund has, however, not altered much with the allocation to mid-cap stocks.