Tata Equity PE Fund – Direct Plan

ISIN INF277K01ND1

Overall analysis 

The fund had a good run at the first but it deteriorated from the benchmark generating negative alpha. The TE of the fund shows that it has not been actively managed. The IR of the fund shows that it is trying to beat the benchmark.  

Performance analysis 

Rolling returns in quartiles

The rolling return chart shows excess 3-year annualised returns in context of peer return quartiles. The blue line’s time above the third green median line indicates the fund’s better than median performance.

The 3Y rolling excess chart of the fund shows that the performance of the fund i.e blue line was outperforming the third green median line from the start, for most of the years. Although since the year 2019 the fund crossed the median line and is above the fourth green lower quartile line. The fund has been giving 0% to -5% returns since then. Overall the fund is not doing well or better than the median. 

Rolling risk/return (Snail-trail) 

The rolling risk/return chart shows excess 3-year annualised returns relative to the index. The top left quadrant would indicate higher returns with lower volatility than index.

The snail trail chart of the fund rolling excess risk/return shows that the fund had a versatile performance and it was giving high returns in the recent years. It slightly declined over the years and it has been giving negative returns and negative risk since the year 2019.

Tracking error

The tracking error chart shows how the fund ‘tracks’ against the index. The higher the TE, the more active the fund’s return has been, with the 2-4% range considered to be barely active, 4-6% range considered to be reasonably active and anything higher attributed to concentrated/focused funds. Funds with TE of less than 2% can be considered to be closet indexers.

TE of the fund was active since the start, over the years TE of the fund has declined but it’s still up to the benchmark which shows the fund was reasonably active till Nov 2021, since the fund is barely active.

Information ratio

The information ratio is a measure of ‘risk-adjusted return’ as it’s the excess return per unit of excess volatility. Active funds should have IR of higher than 1, ideally higher than 1.3 at least to indicate skill. 

IR of the fund was good in the start but slowly it started to decline and was not meeting up the benchmark. The IR of the fund has been above 0% till May 2022 and it’s currently at 1.6%.

Portfolio analysis

Stock style chart

Morningstar’s stock style chart shows the ‘style’ of the stocks in the portfolio in terms of size and value/growth style. The centroid shows the weighted average while the zone circle shows how varied the stock styles are.

The stock style shows that the fund is like the category average. The centroid of the fund is in the large blend section. The ownership zone shows that the investments are majorly in large blend and large growth stocks,  some investments can be seen in the large-value stocks and mid cap stocks. 

Factor profile chart

Morningstar’s factor profile shows the historical style analysis of the stocks in the portfolio in terms of size, value/growth style and other key factors. The blue circle shows the fund relative to the black dot for the category average.

The style of the fund is blend oriented, yield  is slightly low which indicates that the fund’s dividend/buyback yield is low. The assets seem to be growing over the period as it is above the category average and closer to being high. The fund is profitable and above the category average. The volatility and liquidity of the fund is very low. The market capitalization shows that the fund is closer to large-mid cap.

Prepared by – Ayushi Shervegar, August 2023