Considering the fund’s dynamic investment approach and value-based investing style, investors with patience would do well to invest in this fund.
CY09 has been a year of small and mid-cap companies. In the last one year, the stocks of these companies were spurred the most on the bourses. The Tata Equity PE Fund makes a good bet, considering the disciplined value-based investment approach that reduces portfolio risk and tactical asset allocation across market-cap and asset classes. This has helped it outperform the category by 2,008 basis points on an YTD basis. [INSERT_1]
The fund’s mandate is to invest in undervalued companies, which include those with a price-to-earning (P/E) ratio lower than that of its benchmark index - the BSE Sensex. It uses a blend of both value and growth style of investing. The fund had a disappointing start for the first two-odd years, since its launch in 2004. However, the fund made a complete turnaround after 2007 and outpaced its diversified peers by huge margins. Further, its 2008 performance was in line with the category average. Meanwhile, 2009 has been a remarkable year for this fund as it made all the right moves in deciding its asset allocation across various market-caps and asset classes.
In the early 2009, the fund sat on piles of cash to the tune of 15 per cent of the net assets. However, the fund manager was very quick to the lower cash levels to as much as 0.61 per cent in September. Currently, with the market overheating, the fund has increased its cash levels to 13.16 per cent by booking profits in a few of its outperformers, wherein the PE had expanded over the BSE Sensex PE to follow the mandate.
It has also made tactical moves across market-caps, wherein it increased its exposure to the large-cap stocks (almost 70 per cent of the portfolio) at the start of the rally in March. Lately, though, it has shifted its concentration more towards the mid and small-cap stocks with 44 per cent of the portfolio invested in these stocks in November.
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Since June, the fund has shifted its interest largely towards the IT sector and in November its IT stocks contributed almost 14 per cent of the net assets. A defensive sector like FMCG contributed 9.5 per cent. With 43 stocks, the fund sported a fairly diversified portfolio with top ten holdings contributing 38 per cent of the net assets.
Sachin Relekar has been managing this fund starting May 2008 and since then it has managed to beat the category returns by over 811 basis points. Sachin also manages the Tata Life Sciences & Technology Fund that has done impressively well. Such a performance has helped Sachin to be among the top five fund managers in a one-year period. This fund has managed to beat the category by 2,111 and 1,129 basis points over a period of one and three years respectively. These have helped to augment the investors’ trust in the fund, thereby increasing the corpus enormously by 185 per cent over a one-year period.
Considering the fact that value stocks take a longer time for value unlocking, long-term investors can invest in this fund through SIP.