The Hindu Business Line : Tata Pure Equity Fund: Invest

Tata Pure Equity Fund's performance since inception makes it a reasonable investment option. The fund has generated a return of 35 per cent on a compounded annual basis since its launch in 1998 and has outpaced the benchmark BSE Sensex by a huge margin over the same period. It finds a place among the top quartile of diversified funds. The five- and three-year returns are comparable to its peers such as Franklin India Bluechip and HDFC Equity Fund.

Apart from the underperformance in 2002 (which dragged down overall returns) its return matches that of HDFC Equity. The fund invests 90 per cent of the assets in large-cap stocks with a market capitalisation of Rs 5,000 crore and above. Even during the mid-cap rally in 2005, its exposure to stocks with less than Rs 2,000-crore market capitalisation was restricted to 15 per cent. By virtue of investing predominantly in large-cap stocks, this fund is ideal for conservative investors. Investors with a substantial exposure to HDFC Equity and Franklin India Bluechip can add this fund to their portfolio as part of diversification.

Performance: The fund's NAV has grown by 43 per cent in the past year and trails its benchmark index by 7 percentage points. Most of the diversified funds have failed to match the stellar performance of the Sensex and Nifty over a one-year period. The fund's performance slowed during April-October 2006 leading to a drag on its return. However, it has done better the past few months. On a rolling return basis, the fund trailed the Sensex in 12 out of 24 months.

Portfolio Overview: Of the 42 stocks in its current portfolio, 18 were from the Sensex basket. Its assets are invested across 17 sectors and the capital goods industry appears to be the preferred choice. The top ten stocks corner 42 per cent of the assets. The fund restricted its exposure to any single stock to less than 6 per cent of assets during the past two years. It actively manages its portfolio and books profits periodically. During the market rally of early 2006, its exposure to the banking sector was close to 2.5 per cent of the portfolio. But over the last quarter it enhanced it to 10 per cent, booked periodic profits and reduced exposure.

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