Tata Opportunities Fund : HOLD
Investors with high risk tolerance can consider holding their units in Tata Opportunities Fund based on its performance over a five-year period. The fund has not sufficiently compensated investors for the risk assumed. “Opportunities” as a theme requires identifying right calls ahead of the market rally to generate returns higher than the benchmark.
For instance, over a five-year period, it has generated a compounded annualised return of 23.7 per cent, which is 2 per cent above its benchmark BSE Sensex. However, over a two-year period the fund trailed its benchmark by five percentage points and a more volatile S&P CNX Midcap by three percentage points.
Having said that, it has proved its grit over a ten-year period and outpaced its benchmark by good 10 percentage points. Hence, the opportunity theme of the fund appears to be a long-drawn one. Investors with a long-term perspective can consider holding Tata Opportunities.
Performance: The fund’s NAV has grown by 85 per cent over a one-year period — 20 percentage points higher than its benchmark. Among its peers it was at a distant second to Reliance Opportunities, the top performer in the category with a return of 101 per cent.
The fund is vulnerable to market volatility; during the market corrections in 2006 and 2008 it lost more value than its benchmark as a result of holding mid-cap stocks. But it s managed to contain losses during the market crash in October 2008 with a 20 per cent cash position. However, it failed to bounce back during the subsequent marketrally and even trailed its benchmark.
Portfolio Overview: The fund’s November portfolio consists of 47 stocks invested across 20 sectors. In the latest portfolio, the fund has invested 47 per cent of the assets in midcap stocks with market capitalisation of less than Rs 7,500 crore. The fund’s top three preferred sectors were software, consumer non-durables and construction, which together accounted for 38 per cent of the assets.
The fund portfolio turnover statistics confirms that it largely adopts a buy and hold strategy. But the fund has timed sector calls well. For instance, it has reduced its holding in banking sector as it started to lose steam. In May, banking accounted for 13 per cent of the fund’s portfolio but this was gradually reduced it to 3.3 per cent in its latest portfolio. Source : HBL
