The Hindu Business Line : Tata Equity Opportunities: Hold

Investments can be considered in Tata Equity Opportunities Fund based on its three -year performance record. It has outpaced benchmark BSE Sensex during this period.

The fund sports a well-diversified portfolio, with a mix of large- and mid-cap stocks. It invests about 60 per cent of its assets in large-cap stocks with market capitalisation of Rs 5,000 crore and above, and the rest in mid-cap stocks. Though the fund prefers the Sensex as a benchmark; only a handful of stocks from this basket are represented in the portfolio.

Suitability: Given the mid-cap focus, Tata Equity Opportunities Fund is better suited to investors who have a relatively high risk appetite. Investment in this fund can be considered as a diversification measure and need not form part of your core portfolio, as some of the large-cap oriented diversified funds delivered similar returns without exposing their investors to the risks of mid-cap investing.

Performance: The fund’s NAV has grown by 46 per cent over the past year, beating the benchmark returns by 8 percentage points. During this period, the BSE Midcap Index returned 48 per cent while Sensex trailed the Midcap inde x by 10 percentage points.

However, a point in favour of the fund is that it has handled the volatile phases, such as the May-June 2006 correction, well, though it trailed the benchmark during the pullback in the subsequent months.

Profile: The fund’s top ten stocks account for 36 per cent of the assets, which suggests a well-diversified portfolio. The May portfolio featured 55 stocks. The fund continues to be bullish on capital goods and software sectors; together they form 30 per cent of the portfolio. Banking stocks, absent in the portfolio for most of last year, were recently added and make up 8 per cent of the assets.

The NAV per unit on the Growth option is Rs 67.70.

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