The Hindu Business Line : Tata Service Industries: Hold

Investors can stay with Tata Service Industries Fund, which, with 19 per cent return over the past year, marginally under-performed its benchmark Sensex. It has, however, beaten its benchmark in 16 of the 23 months since launch, on a rolling return basis.

The fund has also shown improved performance over the past six months on the back of an IT rally over this period. It appears to be increasingly focussing on media and entertainment stocks, a sector that may hold potential for returns, if the consumer-spending pattern remains robust.

Suitability: Launched in April 2005, Tata Service Industries aims at investing in companies in the service sector. This universe includes sectors such as IT, retail, media and construction. Being theme-based, the portfolio is more concentrated than diversified funds. Unlike its peer PruICICI Services Industries, the fund has higher exposure to individual sectors. This makes it riskier than diversified funds. Investors need to actively track the sectors that fall under the fund's theme and make their moves accordingly.

Performance: Tata Service Industries has returned close to 40 per cent compounded annually since its launch, against the benchmark return of about 45 per cent. The fund has also trailed PruICICI Services over this period. This may be due to the PruICICI's active participation in the capital goods and construction rally, while Tata Service stayed clear of engineering and maintained a low exposure to construction.

Further, the fund has maintained exposure to stocks with a market capitalisation of over Rs 5,000 crore to about 30 per cent as against a higher holding by peers. This may also have depressed returns as mid-cap stocks have largely remained under-performers over the past year.

The last six months saw a sharp improvement in the fund's performance. While it still trails its peer, PruICICI, it did return twice as much as its benchmark. The present basket of sector and stock choices may hold promise.

While it continues to hold a mix of large- and mid-cap stocks, it has added an interesting mix of media stocks such as TV-18, Sun TV and Balaji Telefilms. Other growth sectors, such as hotels and telecom, also account for close to 10 per cent each of the total assets.

More Stories on : Mutual Funds | Recommendation

Article E-Mail :: Comment :: Syndication :: Printer Friendly Page