Tata Equity Opportunities: Steering through storms with large-caps

The fund has scored with smart stock and sector calls and made the best of rallies

With markets remaining volatile, investors who prefer the comfort of large-cap stocks and consistency in returns can consider Tata Equity Opportunities. The fund has beaten its benchmark 93 per cent of the time in the last five years, sailing smoothly through turbulent times and making the best of rallies. While the fund has not delivered chartbusting returns, it has managed to beat its category across one-, three- and five-year periods.

Over the last five years, the fund has kept its large-cap holdings in the 70-80 per cent range. While the fund has delivered a tad less spectacular returns than peers in market rallies, it has outperformed them in lacklustre and bear markets.

For instance, in 2014, while the fund delivered a healthy 49 per cent return, it fell short of chartbuster performers, such as Birla Sun Life Equity or Reliance Top 200 that delivered 55-58 per cent returns. But Tata Equity Opportunities managed to tide over the rough market phases better, delivering 8 per cent return in the sideways 2013 market and a healthy 6.5 per cent return in the volatile 2015.

Skilful juggling

Deft juggling of sectors and stocks has held the fund in good stead. In 2013, upping holdings in stocks such as Bharat Forge, Wipro and Idea Cellular and buying into HCL Technologies and United Spirits paid off. In 2015, trimming exposure in banking and software stocks and increasing holdings in select pharma stocks came to its rescue. Given the deteriorating asset quality of banks, cutting stakes in Federal Bank, ICICI Bank and Axis Bank and completely exiting Canara Bank, Punjab National Bank and Oriental Bank of Commerce helped. Upping holdings in Strides Shasun, Glenmark Pharmaceuticals and Divi’s Laboratories boosted its returns.

However, concerns over the US FDA slapping notices on Indian pharma companies took some steam off these stocks this year. This apart, some bad calls such as Sequent Scientific and Aditya Birla Fashion & Retail have led the fund to underperform category and benchmark so far this year. Even after trimming exposure to pharma stocks, the fund is a tad overweight on the sector compared to the benchmark S&P BSE 200. But the long-term prospects for pharma companies appear robust.

The fund betting on auto, particularly the commercial vehicle segment, is also likely to pay off as the economy recovers, signs of which are already visible. The fund has also increased its stake in SBI that is better placed than other PSU banks at this juncture, given its size and notable presence in retail. As against its benchmark, the fund is overweight on construction and cement stocks, riding on the possible recovery in the economy. Stocks such as L&T, Sadbhav Engineering and Ultratech Cement in the fund’s portfolio are pegged as good bets for the long run.

Read the rest of this article by Signing up for Portfolio.It's completely free!

What You'll Get


 Getting recommendations just for you...
This article is closed for comments.
Please Email the Editor