Investors can retain their holdings in Tata Select Equity Fund based on its long-term track record. As the market is in the midst of a highly volatile phase, large-cap rather than mid-cap-based funds may be the more suitable option for conservative investors at this time.
Tata Select Equity predominantly invests in mid-cap and small stocks. It is basically a thematic fund but its portfolio appears similar to a diversified fund rather than a sector or theme fund.
The risk profile of this fund is relatively less in comparison to a pure sector or thematic funds but higher than that of pure diversified funds. The fund takes concentrated exposure to select sectors of its choice — in recent times, sectors such as capital goods, construction and ferrous metals. The fund is suitable for investors specifically looking to take aggressive exposure to a few sectors at a time.
Performance: Tata Select Equity's three- and five-year returns have comfortably outpaced the benchmark BSE Sensex. With the markets peaking out recently, due to high base effect, one-year returns on the major indices have fallen to low levels in comparison to the previous months. Tata Select Equity has managed to beat the benchmark marginally over the one-year period. But the fund's high allocations to mid-cap and small cap stocks should have resulted in better performance.
The fund does not appear to have participated in investment opportunities in sectors such as banking and consumer goods in this period. The fund has generated higher returns through SIP investments than with lumpsum investments.
If an investor opted for SIP he could have earned 91 per cent in the past one-year (till January). SIPs, since inception, would have generated a compounded annual return of 35 per cent. This is higher than returns generated by lump sum investment by twelve percentage points.
Portfolio overview: In spite of the fund taking concentrated exposure to sectors, it has well diversified holdings with a sizeable number of stocks. For a compact asset size, the fund has 53 stocks in the latest portfolio.
The fund prefers to adopt a buy and hold strategy, exceptional holdings being BHEL, Cummins, Elecon Engineering and Jaiprakash Associates.
0 comments:
Post a Comment