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Tata Equity P/E: Impressive multi cap fund
Wed, Sep 14, 2016
Source : Yash Jashnani, Citrus Interactive

Tata Equity P/E Fund is an open ended multicap equity diversified fund. The primary objective of the scheme is to provide reasonable and regular income and/or possible capital appreciation. The fund has an AUM of Rs 658 crore as on 31st August 2016 which has increased by Rs 52 crore as compared to last year 31st August 2015.

 

Performance

 

The fund’s performance across various time horizons is very good as seen in the table given below. It has beaten its benchmark as well as the equity diversified category average in all the time periods.

 

Scheme Name

YTD

6 Months

1 Year

3 Years

5 Years

Since Inception

Tata Equity P/E Fund

19.83

43.35

23.77

36.39

19.45

21.23

 S&P BSE SENSEX

8.94

23.69

8.25

15.15

11.26

15.65

Category Average

11.9

31.12

13.27

29.23

17.61

NA

Rank

5/160

5/159

6/155

33/142

43/135

NA

Figures are in % as on 31st August 2016; Returns above 1 year in Compounded Annual Growth Rate (CAGR)

 

In terms of the calendar year returns the fund has beaten the benchmark in all time periods except in the year 2013. It has generated higher returns than the equity diversified category in 2011 and 2014 but has underperformed in 2012, 2013 and 2015 as shown in the table below.

 

Scheme Name

2011

2012

2013

2014

2015

Tata Equity P/E Fund

-23.76

29.53

1.75

69.54

0.31

 S&P BSE SENSEX

-24.64

25.7

8.98

29.89

-5.03

Category Average

-23.88

34.18

5.41

54.17

3.75

Rank

71/131

95/136

111/140

31/143

107/152

All figures in %

 

 

Risk: In terms of measures of risk such as standard deviation and Beta (measured over the last 3 years), the fund has taken higher risk compared to its category median.

 

 

 

Standard Deviation

Beta

Tata Equity P/E Fund

1.09

0.93

Category Median

0.97

0.88

Figures are in % as on 31st July 2016

 

Risk-Adjusted Return: In terms of Treynor Ratio and Sharpe Ratio (measured over the last 3 years) the fund has provided higher risk adjusted returns compared to the category median.

 

 

 

Treynor

Sharpe

Tata Equity P/E Fund

0.13

0.1

Category Median

0.09

0.09

Figures are in % as on 31st July 2016

 

Portfolio Category

 

Sector concentration: The fund’s concentration in the Top 3 and Top 5 Sectors is a bit lower than the category median and the fund’s concentration in Top 10 sectors is slightly higher compared to the category median.

 

 

Top 3

Top 5

Top 10

Tata Equity P/E Fund

34.35

46.67

67.75

Category Median

35.05

46.81

66.74

 

 

Company concentration: The Fund’s concentration in the Top 3, Top 5 and Top 10 Companies is higher than the category median.

 

 

Top 3

Top 5

Top 10

Tata Equity P/E Fund

22.17

31.78

51.59

Category Median

16.72

24.67

40.79

 

 

Number of Equity Holdings: The Fund currently holds 38 stocks in its portfolio (31st July 2016), which is lower than the median stock count of the equity diversified category, which currently stands at 46. In the last 5 years the equity holding averages to 46.

 

Cash Equivalent:

           

Its cash equivalent for August was 5.95 per cent. The average cash allocation for the last five years is 3.37 per cent. Its maximum allocation to cash over the last two years is 10.39 percent in September 2015 and lowest was 1.96 percent in June 2014. In 2016 it had an average cash allocation of 4.72 per cent.

 

Portfolio Characteristics

 

The Top 5 sectors include Bank-Private, IT-Software, Power Generation/Distribution, Finance-NBFC and Industrial Gases & Fuels.

 

74% of the portfolio is allocated to cyclicals, 18% to services and 2.5% to defensives.

 

In the last 6 months the fund has bought Bajaj Finserv Ltd., Infosys Ltd., Brigade Enterprises Ltd., GAIL (India) Ltd., Greaves Cotton Ltd., Greenply Industries Ltd., Hindustan Zinc Ltd., Kotak Mahindra Bank Ltd., Raymond Ltd., Sun TV Network Ltd., Tata Chemicals Ltd., United Breweries Ltd., and VST Industries.

 

Stocks of Aditya Birla Nuvo Ltd., Arvind Ltd., Axis Bank Ltd., Bharat Electronics Ltd., Engineers India Ltd., Hindustan Petroleum Corporation Ltd., ICICI Bank Ltd., IL&FS Transportation Networks Ltd., LIC Housing Finance Ltd., Mahindra & Mahindra Finance Services Ltd., MBL Infrastructures Ltd., Reliance Industries and Tata Motors Ltd.

 

Currently 52% of the corpus is invested in large cap stocks, 33% in mid cap and 15% in small cap companies.

 

Process

 

The scheme would invest 70-100% in equity & equity related-companies whose rolling P/E at the time of investment is lower than the rolling P/E of S&P BSE SENSEX. It would also invest 0-30% in equity & equity related-other companies. It would invest 0-20% in debt including money & money market instruments. 

 

Tata Equity P/E Fund would seek to identify undervalued companies in the market, and predominantly invest in companies whose rolling P/E is lesser than that of the S&P BSE SENSEX (these companies may or may not be a part of the S&P BSE SENSEX). The Fund could also invest in equity shares of other companies and in debt and money market instruments to the extent of 30% of the net assets. The scheme seeks to identify undervalued companies and under normal circumstances at least 70% of the net assets would be invested in shares which have a rolling P/E ratio based on the past four quarterly earnings for individual companies as compared with the rolling P/E of the S&P BSE SENSEX based on past four quarterly earnings of the S&P BSE SENSEX stocks.

 

Fund Manager

 

Mr. Sonam Udasi recently took over as the fund manager of Tata Equity P/E Fund  - in April 2016. Previously he was with IDBI Capital Market Services Ltd. as the Head Research, Reporting to Executive Vice President. He was also associated with the BRICS Securities where he was the Head – Consumer Vertica, Reporting to Head Equities. Before that he was also with Prime Securities as Head Research, Reporting to President. Before that he was with JM Financial AMC as Senior Analyst Reporting to Chief Investment Officer.

 

Mr. Udasi manages the Tata Index Fund-Sensex & Nifty, Tata Banking & Financial Services Fund, Tata Digital India Fund, Tata India Consumer Fund, Tata India Pharma & Healthcare Fund, Tata Resources & Energy Fund and he also manages the equity portfolio of Tata Regular Savings Equity Fund, Tata Young Citizens Fund, Tata Dual Advantage Fund Scheme A, B & C, Tata Dual Advantage Fund Series 2 Scheme A, B & C and Tata Dual Advantage Fund Series 3.    

 

Our View


The fund has a unique approach of focusing on undervalued companies and continues to impress with its performance after the recent change at the helm. The fund, with its high exposure to cylicals, is likely to do well as the market rallies. It can be considered for multi cap allocation for your portfolio. 

 

 

 

 

 
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