The Hindu Business Line : Tata Select Equity: Invest

Those who would like focussed exposures to core sector stocks can consider investing in Tata Select Equity. The fund has turned in an impressive performance over the past year. As it has accumulated a decent track record over a five-year period, the fund may be considered ahead of Birla Sun Life Basic Industries, which has witnessed a slowdown in performance since 2005.

While it is a theme fund, it invests in a wide cross section of sectors, which lends the portfolio a diversified look. It does, however, take concentrated exposures to sectors; nearly 30 per cent of its assets are invested in the capital goods sector. As several diversified funds, including most funds in the SBI Magnum fold, have capitalised on the boom in this sector, investors can consider this fund more as a diversification option. Conservative investors can consider allocating a smaller portion of their money towards this fund, in view of its higher risk profile.

Performance: The fund has outperformed the index in each of the past five years by a significant margin. Its performance has picked up pace since 2005. Over the past year it has delivered a return of more than 90 per cent, which places it in the top 25 equity funds. While more focussed theme funds such as DSP ML TIGER have raced ahead of the fund, Select Equity has kept pace with peers such as Tata Infrastructure and UTI Basic.

Now regulars in many a portfolio, the stocks of Siemens, Crompton Greaves and Thermax figured prominently in Tata Select's holdings since February 2004. The fund was also an early entrant in the stocks of Jyoti Structures and KEC International, which have witnessed multi-fold gains over the past couple of years.

Portfolio overview: The fund has a relatively small asset base of Rs 90 crore. The portfolio consists of about 40 stocks, with holdings in no single stock exceeding 7 per cent. The fund has been partial towards capital goods with holdings spread over several stocks.

About 30 per cent of its assets are invested in stocks with a market capitalisation of less than Rs 2,000 crore, which sets its apart from other funds that have a strong core sector focus. Prominent mid-caps include Gujarat Alkalis, BOC India, Tamil Nadu Newsprint, Emco and Man Industries, to name a few.

Fund facts: Tata Select Equity was launched in 1996. It has dividend and growth options. The minimum investment is Rs 5,000. An entry load of 2.25 per cent is levied on investments less than Rs 1 crore. The exit load is nil.

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