The Hindu Business Line : Tata Equity Opportunities Fund: Invest

Investments can be considered in Tata Equity Opportunities Fund based on its three- and five-year track record. The fund has consistently outpaced the benchmark and category average return during this time frame. The lone exception was 2006-07, when it delivered a single-digit return.

A well diversified portfolio with a bias for large-cap makes the fund a good option in a volatile market such as the present one. The fund now has about 60 per cent of its portfolio in large cap stocks with market capitalisation above Rs 7,500 crore.

Suitability: The fund seeks to invest in value and growth stocks. While the fund’s mid-cap exposure of close to 40 per cent has dragged performance, value picks in sector such as FMCG and pharma have provided some cushion on the downside. Tata Opportunities has a higher risk profile than other diversified funds. Investors willing to take the additional risk-return ratio arising from the fund’s exposure to midcaps can consider investing in the fund.

Performance: The fund’s NAV has grown by 28 per cent in the past one year outpacing its benchmark Sensex and the broader index S&P CNX-500 by eight percentage points. The fund however has a tendency to decline higher than its benchmark as demonstrated in recent and past market corrections. On a rolling return basis over the past 24 months the fund has outpaced the Sensex 62 per cent of the times.

Portfolio Overview: The fund has 52 stocks in its portfolio and the top ten account for 31 per cent of the assets. Sensex being the benchmark, the fund had less than dozen stocks forming part of that basket. Capital goods continue to corner a good chunk of the portfolio with stocks such as BHEL, Larsen and Toubro and Crompton Greaves. The fund held on to Asian Electronics without a change in the holdings despite the stock correcting steeply from its peak.

In the banking segment the fund has picked good stocks in earlier quarters but pruned exposure during the recent correction. HLL was added to the FMCG space over the last two months thus enhancing exposure to the sector. The fund also contained losses by pruning exposure to sectors such as construction and power which corrected steeply.

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