Tata Small Cap Fund – Direct Plan  


Overall analysis 

1-yr rolling excess returns have given higher returns and it has touched 10% in february 2023 and TE ranges above 6% indicates the fund is active. The fund has given higher excess return in comparison to its peers, and it is above the first quartile over the past 6 months.

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 fund’s 3-yr rolling excess return chart shows that the fund has delivered excess returns in the 4-8%pa over 2022, until June 2023, which was well above the median throughout the period.

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.

This fund has shown impressive 3-year excess returns, touching 8% per annum and a significant time around the 4-6% pa, whilst lower than index volatility of 2-3% pa. However, the excess return came down to around 4% towards the end of May,2023.

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.

The fund’s tracking error has been above 6% consistently, going up to nearly 11% in 2020 before dropping back to the 6-8% range in 2021 to mid 2023, indicating it is a very active fund.

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. 

The fund’s information ratio was close to 2 in December 2019 before sliding to -2 during 2020-2021 but has since recovered in late 2021. Indeed the IR has been extremely impressive at above 2 in early 2023.

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 chart shows that the fund style is a mid-small cap growth fund.

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 factor profile chart shows a growth-oriented style with historical range also being towards growth, albeit slightly below the category average. The fund has shown a very wide range for the momentum factor over the past 5 years. The volatility factor also showed a wide range, and is currently higher than the category average.

Prepared by – Dhruvi Shah, August 2023


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