The TATA India Consumer Fund is an equity-based multi-cap mutual fund of TATA Asset Management Limited that primarily focuses on the consumption-oriented sectors of the market. This fund has chosen the consumer-oriented sector as it is poised to grow due to strong structural drivers that will drive consumption such as, an evolving middle-class, exponential GDP growth and a growing urban consumer sector. This is an open-ended scheme. The fund aims to provide investors with long-term capital appreciation and income through investment in equity and equity related instruments.
Performance
The TATA India Consumer Fund has outperformed the benchmark and its category in 2017 by a considerable margin. As this is a relatively new fund its annualized returns over long investments horizons, like 5 years, are difficult to predict, but it does outperform its category and benchmark for a 1-year investment horizon, which is highly desirable for an equity-based mutual fund. The annualized returns of the fund against its benchmark have been provided in the chart below.
|
Trailing Returns (%) |
1-M |
3-M |
6-M |
1-Y |
|
Fund |
3.49 |
-4.77 |
-3.62 |
2.53 |
|
5.24 |
-3.02 |
-2.99 |
1.75 |
|
|
Category |
4.14 |
-2.5 |
-2.95 |
-0.46 |
Asset Allocation
The TATA India Consumer Fund is an equity-based mutual fund that invests a minimum of 80% in equity and equity-related instruments and a maximum of 20% is allotted to debt and other stable money market instruments to provide the fund with a level of stability which giving its investors superior returns when compared to its peers. The asset allocation according to the mandate of the fund is given in the table below
|
Instrument |
Minimum Allocation |
Maximum Allocation |
Risk Profile |
|
Equity & equity related instruments of companies in the Consumption Oriented Sector in India. |
80% |
100% |
High |
|
Debt & Money Market Instruments |
20% |
Medium to Low |
The present asset allocation of this fund has been mentioned below.
Portfolio
The TATA India Consumer Fund endeavors to maintain a diversified portfolio across market sectors. The fund carefully picks stocks of companies within the consumer-oriented sector that have displayed a strong level of growth and employ sustainable business practices. The fund is presently heavily invested in the FMCG, Automobile and Service sector of the economy. The present sectoral allocation of the fund against its benchmark index has been provided below.
Sectoral allocation is shown below
Top Holdings
|
Company |
Sector |
PE |
3Y High |
3Y Low |
Asset % |
|
Hindustan Unilever |
FMCG |
70.22 |
10.68 |
10.68 |
|
|
ITC |
FMCG |
28.67 |
11.63 |
2.46 |
10.35 |
|
Maruti Suzuki India |
Automobile |
29.37 |
11.15 |
3.61 |
6.5 |
|
Bata India |
FMCG |
54.24 |
5.47 |
5.33 |
|
|
Dabur India |
FMCG |
53.85 |
5.05 |
4.79 |
|
|
Future Retail |
Services |
549.2 |
8.3 |
4.67 |
|
|
GSK Consumer Healthcare |
FMCG |
38.38 |
4.48 |
4.06 |
|
|
Havells India |
Engineering |
54.41 |
3.31 |
3.16 |
|
|
Nestle India |
FMCG |
66.79 |
3.09 |
3.09 |
|
|
Jubilant FoodWorks |
Services |
58.82 |
4.19 |
3.05 |
Risk Profile
Equity Risk
The TATA India Consumer Fund is an equity-based mutual fund and therefore carries the risks associated with equity-based instruments. The fund invests in large-cap companies that display a strong level of growth. Even though the large-cap segment is a relatively stable segment of the equity market it is still prone to market fluctuations. Market fluctuations can cause a loss of investment including the loss of capital. The fund is also a sector-based fund and is, therefore, exposed to concentration risks which are usually sector specific. Due to trading volumes, settlement period and transfer procedures the liquidity of the fund may be affected as well. As the fund concentrates majorly concentrates on the consumer-oriented sector of the market it is also exposed to concentration risks, which is usually sector-specific.
Debt Risk
The TATA India Consumer Fund allocates a nominal amount of its assets towards debt instruments, even though these types of instruments are considered relatively safe and stable there are factors that can affect these as well. Changes in interest rates can drastically affect the returns on long-term debts, thereby, having a large impact on the Net Asset Value (NAV) of the fund. Debt funds also carry credit risk, this refers to the risk that the issuer of the debt instrument will not be able to fulfill the repayment obligation attached to the instrument.
Risk Mitigation
Equity Risk Mitigation
The fund endeavours to maintain a strong portfolio of stocks within the consumer sector of the market, even though this will expose the fund to concentration risks, the consumer-oriented sector is poised to do well in the future and the fund being open-ended can change its composition to mitigate concentration risks in case they arise in the sector. The fund invests in large-cap companies that have historically displayed high growth and sustainable business practices to mitigate market fluctuation risks. The fund strives to maintain an asset-liability balance to ensure that payment during redemption of units is done on time.
Debt Risk Mitigation
The TATA India Consumer Fund carefully selects its debt instruments from companies that have a high credit rating from a SEBI registered credit rating agency to mitigate credit risks associated with debt instruments. The fund also tries to time its maturity according to expected interest rate changes in the market to mitigate interest rate risks.
Fund Manager
Mr. Sonam Udasi
Mr. Udasi has a total experience of 19 years in Equity Research and successfully manages a number of funds for TATA AMC Private Limited, he joined TATA AMC as Head Researcher in April 2014. Prior to joining TATA AMC Mr. Udasi worked with IDBI Capital Research Team which was rated 3 “Top Most Award-Winning Team” by Thomson Reuters Starmine Awards for Excellence in 2013. Mr. Udasi has a Postgraduate Diploma in Business Administration, specializing in finance.
