Jul 24, 2012 08:04 PM IST | Source:

Tata Equity Opportunities: Failed to maintain consistency

Financial advisor Arnav Pandya, on analysis of the fund advices investors with a conservative approach to wait till the fund establishes stability before making any investments in the same.

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Tata Equity Opportunities fund is an open ended Equity Diversified fund with an objective to generate capital by investing in equity and equity related instruments of well researched value and growth oriented companies. However, over the years, this fund has failed to maintained consistency in its performance. Financial advisor Arnav Pandya advices conservative investor to wait until the performance of the fund stabilises before investing.

Nature: Diversified Equity

Inception: February 1993

Assets under Management: Rs 278 crore at the end of June 2012

Fund Manager: Bhupinder Sethi & Dinesh Dacosta


  • The fund invests across market caps to benefit from opportunities in the equity markets. At the end of June 2010, the fund had the highest sector exposure to software at 12 per cent of the total portfolio followed by Banks and Pharma.  The amount in cash and cash equivalents was negligible and Infosys was the top holding with an exposure of just over 4 per cent of the portfolio. Other companies with a high exposure included ONGC, Sadbhav Engg, Wipro, and Oracle. The portfolio turnover ratio was 136 per cent and it was outperforming its benchmark the BSE Sensex over the one and five year time periods.
  • At the end of December 2010 the fund had the highest exposure to auto with nearly 12 per cent of the portfolio here. This was closely followed by banks, software, Pharma, and consumer non durables. Lupin was the top individual holding in the portfolio though HDFC Bank was not far behind.  Some of the other companies with a higher exposure include M&M, TVS, Hindalco, HUL, Reliance Industries, and Tata Steel.  The fund was underperforming the benchmark over the one, three, and five year time periods.
  • Six months later banks had surged to the top of the sector holdings with an exposure of over 16 per cent. This was followed by consumer non durables and Pharma. The fund was now taking a slightly higher exposure to sectors as well as individual stocks. The top holdings in the fund HUL and HDFC Bank had an exposure of over 5 per cent while ICICI Bank, ITC, Cadila Healthcare, M&M and Sadbhav Engg were some of the other stocks with a significant exposure. The funds portfolio turnover ratio remained above 125 per cent and it was underperforming over the one, three and five year time periods.
  • At the end of December 2011 there were three sectors with a similar exposure of around 13 per cent and these were Pharma, consumer non durables and banks.  HUL continued to be at the top of the individual holdings with a figure of over 5 per cent.  Infosys, HDFC Bank, HCL Tech and ITC were some of the other top holdings of the fund.  The portfolio turnover of the fund dropped sharply to 73 per cent and it now had the BSE 200 as the benchmark index for the scheme.
  • The situation had not changed much by the end of June 2012 as the top three sectors had a similar kind of holding and these were software, Pharma and banks. The fund took a higher amount of risk as the exposure to the top holding Infosys was now more than 8 per cent. The other companies with a high exposure included HDFC bank, HDFC, Bharti Airtel, Divis Lab and ONGC.  The fund had a drop in its portfolio turnover ratio to around 50 per cent.
  • Investors who are conservative and looking for long term investment opportunities can wait for a sustained improvement in the performance of the fund before making their investments.


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