The fact that we are comparing Franklin India Taxshield and Birla Equity Plan indicates that they do have some commonalities. So let's get those out of the way first.

Both are four-star, diversified equity, tax saving funds that have been around for more than eight years. Interestingly, both had fund manager changes this year.

Anand Radhakrishnan took over Franklin India Taxshield in April 2007 and Sanjay Chawla took over the reins of Birla Equity Plan in September this year.

They even tend to own the same number of stocks. This year, Birla Equity Plan averaged at around 34 stocks every month, while the number for Franklin India Taxshield is 37 stocks. And, coincidentally, both funds have been showing an increase in the months of August and September where the number in the portfolio has wavered between 41 and 44 stocks.

Both shirk debt. While Franklin India Taxshield steers clear totally, Birla Equity Plan held a portion in debt twice this year: June (11.97 per cent) and March (10.14 per cent). Yet, they are blatant when it comes to holding cash. This year, the average cash holding was 6.29 per cent (Franklin India Taxshield) and 7.84 per cent (Birla Equity Plan). But averages don't always give the correct picture. In the cash of Birla Equity Plan, the cash allocation fluctuated from 0.46 per cent to 15.52 per cent.

But below this superficial appearance of being similar, lies style and strategy that makes them as different as chalk and cheese.

Birla Equity Plan is an awfully bold choice. One look at the sector allocation will tell you that the fund manager is a daring contrarian. His top two sectors are Technology (16.73 per cent) and Automobiles (14.58 per cent). In fact, the automobile exposure has increased from 10.87 per cent (April 2007) to 14.58 per cent (September 2007). Ditto for technology which rose from 12.74 per cent (April 2007) to 16.73 per cent (September 2007). But in case you feel that he has lost touch with reality, consider this. In the top 10 holdings, just two are automobile stocks: Maruti Udyog [Get Quote] and Goodyear India Ltd [Get Quote]. And it also includes companies like Bharti Airtel [Get Quote], Reliance Communications [Get Quote] and Tata Power [Get Quote]. The remaining five fall under the categories of Basic/Engineering, Metals, Construction, Energy and Diversified. Short and sweet: He deftly goes against the herd without putting his neck on the block.

On the other hand, Franklin India Taxshield began reducing its automobile holdings from 12.83 per cent (February 2007) to 4.94 per cent (September 2007) and its technology holdings from 18.26 per cent to 12.54 per cent during the same period. It has taken the well beaten path of Financial Services (27.10 per cent) and Basic/Engineering (15.17 per cent). But don't misinterpret this as a lack of conviction. He will wager bigger bets than his counterpart in Birla Equity Plan. So his top 10 stocks command 26.08 per cent of the portfolio but the same in Birla Equity Plan is at 21.70 per cent. Also, his allocation to the top three sectors is more at 54.81 per cent as against 42.45 per cent in Birla Equity Plan.

Though Birla Equity Plan has been seeing a consistent rise in its assets from Rs 99.84 crore (February 2007) to Rs 151.87 crore (September 2007), it is still a small offering that makes it suitable to dabble in small-caps. And this it has done. Its mid- and small-cap stocks account for almost 60 per cent of the portfolio.

Naturally, this difference in investing style has a direct bearing on the type of investors they attract. Franklin India Taxshield is a more conservative, large-cap offering that targets the investor who wants peace of mind. Birla Equity Plan is a more aggressive fund with a mid-cap tilt and a contrarian bent. It will go after those who don't mind a bumpy ride.

Anand Radhakrishnan took over Franklin India Taxshield in April 2007 and has managed to pull the fund out of its three-star ranking to a four-star one. Historically, this one has been more of a middle-of-the-road performer. You should not expect a glamorous outperformance here. But its appeal lies in the fact that it tends to fall by less than the category average during a slump. This was evident recently too.

In the March quarter, when the category average return was negative at (-)6.45 per cent, this one fell less at (-)4.39 per cent. In the case of Birla Equity Plan, expect surprises, both good and bad. Let's take the June 2006 quarter. The category lost (-1)15.35 per cent. Birla Equity Plan fell harder at (-1)16.28 per cent. Franklin India Taxshield was lesser hit at (-)13.65 per cent. But in the very next quarter of September 2006, Birla Tax Plan delivered 21.09 per cent as against the category average of just 14.95 per cent while Franklin India Taxshield was at 14.08 per cent.

Birla Equity Plan shuffles its portfolio often. In the past 13 months (September 2006 to September 2007), just seven funds have been constant in the portfolio. But the same figure for Franklin India Taxshield is 13 stocks. In the same period, Franklin India Taxshield held 20 stocks for just one month while Birla Equity Plan held 23 during this time.

While Birla Equity Plan is known for its aggressive portfolio churning, swift moves and strategically timed entry and exit into opportunistic sectors, right now it is Franklin India Taxshield delivering better returns with its exposure to Basic/Engineering and Financial Services.

But investors should not make a decision on short-term returns. The performance must be looked at in conjunction with the investing style of the fund manager. .