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Tata Pure Equity

Dhirendra Kumar

Tata Pure Equity fund, erstwhile Tata Twin Option, was launched in March 1998 with the objective of investing in blue-chip companies. Till date, the fund has given three dividends - 16% in June 1999, 100% in January 2000 and 20% in July 2000. While entry into the fund is at NAV, it levies a deferred exit load of 1% and 0.5% for redemption within 3 and 6 months, respectively.

Tata Pure Equity has returned an impressive 25.55% since launch against a market return of 3.29% over the same period. The fund managed these returns despite a concentrated portfolio of technology stocks, thanks to the large inflows that came along with the heavy dividend payouts in a falling market. This has given a distinct edge to the fund by helping it shed less in a falling market.

Starting off with a relatively small corpus, the fund bought a bundle of quality stocks from software, pharma and FMCG sectors, which constituted an average 60% of the portfolio till second half of 1999. However, active management saw the fund deftly pare its holdings in FMCG stocks by the third quarter of 1999 and exit pharma holdings by end of 1999 with decent profits. The fund ended 1999 with an impressive gain of 166% against 64% by BSE Sensex.

FUND BASICS   Objective    Size (Cr)    NAV: 16/04/2001    Exit Price    Entry Price    Total Return   Growth   35.55   9.32   9.32   9.32   26.55%

However, like most of its peers, the fund went on a tech binge in 2000. Yet, amid the brutal hammering of the technology stocks, the fund managed to stem losses – thanks to a steadily growing corpus and particularly large mobilisation in the falling markets of March and July 2000. In the one year ending February 2001, the unit capital has vaulted by 307%. This helped the fund minimise losses at 8.52% against a market loss of 20% in 2000. In the last quarter, the fund has broad based the portfolio with purchases in pharma , health care and other economy stocks at attractive levels.

Benchmark Comparisons (%)      1M    3M    6M    1Yr    3Yr   Fund   -11.76   -23.06   -23.72   -37.49   -   Nifty Tot. Ret.   -14.33   -20.24   -14.90   -35.29   -3.66   Sensex   -15.50   -21.13   -17.25   -41.33   -8.22   Obj. Avg.   -14.04   -24.88   -22.64   -46.30   1.78

Tata Pure Equity has been lucky with timely inflows, which helped guard assets against the volatility of a tech heavy portfolio. The fund should be able to give investors a steadier ride, provided it sticks to the diversification theme.

   

Top Holdings (31/03/2001)      Value (Cr)    % of Assets   Cipla   1.85   5.20   Tata Tea   1.59   4.46   VSNL   1.56   4.39   Moser Baer   1.52   4.29   Grasim Industries   1.49   4.20   Indian Hotels Co.   1.48   4.16   Infosys Tech.   1.47   4.15   H D F C Bank   1.44   4.04   NALCO   1.32   3.71   Tata Power Co.   1.29   3.63   Sun Pharmaceutical Inds.   1.14   3.21   Aptech   1.12   3.14   Hoechst Marion Roussel   1.09   3.07   H C L Tech.   1.05   2.97   Knoll Pharmaceuticals   1.04   2.93

Source: Value Research

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