Tata Equity P/E Fund- (G): Fund review

Value investing is all about selecting stocks that trade for less than their intrinsic values. Besides, when value investing is coupled with the strategy of selecting stocks based on how cheap or attractive they are with respect to broader indices, it adds a solid edge to such investing as it gives better view of valuations.

Among schemes that follow this strategy, conservative investors can consider investing is Tata Equity PE. The scheme’s fund manager Sonam Udasi selects 70% of the stocks in his portfolio that quote at price-to-earnings multiple (trailing) lower than that of the Sensex. The remaining 30% is invested in companies, which may quote at price-to-earnings multiples higher than that of the Sensex, but have higher earnings visibility and attractive return ratios. This strategy has worked for the scheme’s performance. The scheme has given 14% and 22% returns in the past three- and five-year periods, while its peers have given 10% and 18% returns during the same period.

In the past six months, the scheme’s fund managers Sonam Udasi and Amey Sathe have stuck to their conviction bets, which strictly follow the value investing theme. These companies are Coal India, Bajaj Finserv and ITC.


Portfolio change

New entrants	Complete exits	Increase in allocation
Bajaj Finserv	BPCL	ICICI Prudential Life Insurance Company
Coal India	Gail (India)	Sun TV Network
DCB Bank	Indian Oil Corporation	Max Financial Services
HDFC Bank	Zee Entertainment

Returns

Period	CAGR Return	SIP CAGR Returns	Value Fund- AVG CAGR Return
1 Year	-5.14	-10.76	-6.83
3 Year	14.32	9.90	10.11
5 Year	22.03	14.35	18.51

Returns peer comparison

Scheme name	1-year	3-year	5-year
Aditya Birla Sun Life Pure Value Time	-20.88	9.23	23.07
HDFC Capital Builder Value Fund	-3.23	11.66	17.94
Invesco India Contra Fund	1.19	14.23	21.99

Expert Take
Harshvardhan Roongta, CFP, Roongta Securities:
Buying at the right valuation is one of the key parameters to successful investing. Irrespective of how good a company is, there needs to be a reasonable price at which it is bought. This scheme is a value-oriented multicap fund, which invests primarily in companies, which are available at a price multiple cheaper than the that of the BSE Sensex. This scheme works for investors who look to build a long-term profitable based on value theme.