The Hindu Business Line : Tata Life Sciences and Technology: Pare exposures

INVESTORS in Tata Life Sciences & Technology Fund can consider paring exposures. The fund has done better than most other sector-specific schemes. But its portfolio resembles that of a diversified fund.

This is due to the rather liberal investment objective that opened up a host of sectors for inclusion in the portfolio. If you are looking at any specific sector, the Tata Life Sciences & Technology Fund cannot be the right option.

That being the case, its performance cannot but be viewed in the light of other diversified schemes. On this basis, the returns do not compare favourably across different time periods. The returns since launch have been about a percentage point and, over the last three years, the return has been negative, at about 16 per cent per annum. The stocks in the portfolio trade at the upper end of valuation. As such the scope for gains may be limited. In this backdrop, investors can cut exposures and switch to well-defined diversified schemes that have a consistent track record over different time periods. Fund such as Bluechip, Prima and Zurich India Equity are among the superior options.

Suitability: In a sector-specific fund, the risks are generally higher than in diversified funds.

Tata Life Sciences may be a more diversified portfolio than conventional sector funds. But its positioning means the portfolio cannot be managed in a way a typical diversified fund may be. This could add to the risk profile. Also, the 34 per cent exposure to the tech sector enhances the risk level. As such, the fund may be appropriate only for investors with a high appetite for risk.

Portfolio status: The exposure to the IT sector is fairly high compared to funds without a completely IT-centric investment objective.

The top stocks in this sector also represent a mixed bag, with the likes of Mastek and Digital GlobalSoft among the top ten holdings.

Outside the top ten too, holdings such as VisualSoft and Satyam Computer are highly volatile.

The fund is also heavy on pharmaceutical and engineering stocks with each accounting for about 20 per cent of net assets.

Outside of these three main sector themes, the rest of the portfolio is spread across a wide range of sectors — from chemicals to consumer products. The portfolio is also a combination of large-cap and mid-cap stocks

: Tata Life Sciences and Technology Fund was launched in June 1999. It offers entry at 1.75 per cent and exit at NAV. The minimum investment amount is Rs 5,000. Its asset base is Rs 16.6 crore. The fund manager is Mr S. Sankaranarayanan.

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