Stability Personified - Tata Pure Equity Fund

What needs to be noted here is that from the last many editions we have been recommending large cap biased funds. This is mainly due to the current volatility in the market, where investing in the large cap is wiser and less risky than in mid-cap and small-cap funds. Secondly, taking the bet in the large caps means investing in the companies, which are leaders in their area of business that are also endowed with the stability of income.

Being predominately a large cap fund, Tata Pure Equity has been a 100 per cent equity-oriented scheme since its inception. The fund aims to provide investors with an opportunity for long-term growth in capital through active management of investments in a diversified basket of stocks in the large cap space. The fund uses the combination of top-down and bottoms-up approach in asset allocation. However, in the current volatile and fast-changing environment, the fund uses the bottom up approach rather than being overweight in any sector. As per the August 31, 2008 fact sheet, the fund invested 10.70 per cent of its net assets in Nifty Futures, as a temporary exposure on account of unclear environment and difficulty in predicting the sectoral direction. During the same period, the fund was overweight on sectors like industrial capital goods and infrastructure (13.72 per cent) on account of the long term growth potential in the sector, while the exposure to consumer non-durables (11.80 per cent) and banks (9.02 per cent) was mainly due to the favorable domestic demographic profile and the attractive valuations in the banking sector.

The fund is managed by M Venugopal, a veteran fund manager who is associated with the fund house since 1995. He manages other top performing funds like Tata Infrastructure, Balanced, Young Citizen, Equity PE, and Equity Opportunities. According to Venugopal, "The funds success can be attributed to various factors like identifying the right trends early and with conviction playing those trends, as tute stock-picking etc. Once quality companies are identified and entry points defined, the fund invests at such opportune times and stays patiently invested till the time the investment thesis is played out and adequate returns are generated from it.” The fund gave returns of 17.85 and 34.23 per cent in the last 3 and 5-year period while the category returns for the same periods stood at 13.03 and30.34 per cent respectively. And when we consider the one-year returns, the fund returns stood at minus 12.85 per cent, while the category returns stood at minus 17.70 per cent. The current cash level of the fund is almost 10 per cent which might be deployed on getting an attractive investment opportunity. Thus, considering the fund managers’ past track record and the funds’ performance, investors can consider taking exposure in this fund.