Tata Pure Equity: For investors seeking broader market buys

On analysis of the Tata Pure Equity Fund, Arnav Pandya says that this fund is meant for investors who want a slight bit of mid cap exposure along with their large cap investment and want to invest for a longer time period of three years and more.

Tata Pure Equity Fund

Nature: Equity oriented open ended

Assets under Management: Rs 580 crore at the end of October 2011

Inception: May 1998

Fund Manager: M Venugopal

Analysis

• The fund had an exposure across large and mid caps stocks at the end of April 2010 which has been consistently maintained. The fund manager had adopted a different strategy at this point as auto was the top sector holding of the fund followed by finance and software. The holdings of the fund were extremely spread out with the top holding Reliance Industries having an exposure of just 5% with most of the other top holdings in the 3-4% range. A couple of banks HDFC Bank and ICICIC Bank were also in the top holdings list. The fund was outperforming its benchmark the Sensex over all time periods since its inception.

• Six months later there was a sharp change in the position in the portfolio as banks jumped from the fourth spot to the first spot in terms of the sector holdings with an exposure of around 12%. Auto and finance were the other top two sectors. Tata Motors, HDFC Bank, Cadila Healthcare, Infosys and Reliance Industries were some of the top holdings of the fund. The fund now had a turnover ratio of 86% which was down significantly from the figure witnessed six months ago and it was still comfortably beating the benchmark over all time periods of comparison.

• By the end of April 2011 the fund had adopted a slightly aggressive stand in terms of the management of the portfolio. Banks had the highest exposure in the portfolio and the figure here was around 20% which was high considering the past track record of the fund. This was followed by consumer non durable and pharma. Individual stocks also had a 5% plus exposure and some of them here included SBI, HDFC Bank, ITC and ONGC. The fund was now beating the benchmark for all time periods except for the last one year.

• There was a change in the portfolio of the fund by the end of October 2011. Consumer non durables were the biggest sector in the portfolio with an exposure of nearly 16% followed by banks and software. Infosys was the top holding followed by Reliance and HDFC Bank. ITC and Hindustan Unilever were the other constituents of the top 5 list. The fund had a turnover ratio of 78% and it was still an outperformer over the longer time period.

• This fund is meant for investors who want a slight bit of mid cap exposure along with their large cap investment and want to invest for a longer time period of 3 years and more.

Disclaimer: Views expressed in this article are entirely personal.
arnavpandya@hotmail.com.

For full details of the fund including NAV performance, portfolio, and peer comparison click here.