NFO analysis: Tata Multi Asset Opportunities Fund
Multi-asset allocation is the category, which is actually a truly-diversified portfolio. The investment spectrum increases for these funds as they can invest in commodities apart from equity, debt and cash. This actually proves to be beneficial in the long-term.
With an intention to create wealth for its investor in such a wobbly economic situation, Tata Asset Management Company (AMC) has launched Tata Multi Asset Allocation Fund. The New Fund Offer (NFO) of the said scheme is open for subscription up to February 28, 2020. It will again re-open for subscription on March 12, 2020.
Objective
The fund is an open-ended scheme with an investment objective to generate long-term capital appreciation by investing in equity, debt, exchange traded commodity derivatives and other instruments as the fund manager might deem fit.
Having said that, there is no assurance that investment objective of the fund will be achieved. The scheme in no way assures or guarantees any returns.
Asset Allocation
|
Instruments
|
Indicative allocations
(per cent of net assets)
|
Risk Profile
|
|
Minimum
|
Maximum
|
High/Medium/
Low
|
|
Equity and equity-related instruments
|
65
|
80
|
Medium to High
|
|
Debt and money market instruments
|
10
|
25
|
Low to Medium
|
|
Commodity ETFs, Exchange Traded Commodity Derivatives (ETCDs)
|
10
|
25
|
Medium to High
|
|
Units of REITs & InvITs
|
0
|
10
|
Medium to High
|
Benchmark
The scheme is benchmarked against the composite benchmark of 65 per cent S&P BSE 200, 15 per cent CRISIL Short-Term Bond Fund Index and 20 per cent iCOMDEX Composite Index. In this category, there are total six funds and all have different composite indices. Therefore, the peers to this fund would change from time to time.
Investment Strategy
The scheme aims to generate capital appreciation in the long-term by investing across asset classes. Based on the clearly defined objective, the fund manager will distribute assets of the scheme in various categories of equity, debt and commodities. The major part of the investment would be in equity and equity-related instruments with a gross exposure of the scheme, being at 65 per cent or above at all times. The remaining corpus would be invested in debt and money market instruments and in permitted instruments in Indian commodities market.
Equity and equity-related instruments
Investment in equity and equity-related instruments will be done with internally driven process based on:
(i) Fundamental outlook for equity markets and the prevailing valuation framework,
(ii) The macroeconomic environment (including interest rates and inflation), and
(ii) General liquidity and technical considerations.
Therefore, the investment strategy might entail the use of equity derivatives to manage the equity exposure as necessitated by the above factors.
The scheme is also said to take long-term call on stocks on the basis of the fund house’s investment philosophy of ‘Growth at Reasonable Price’, that offers superior risk-reward. While carrying out stock selection, macro and economic outlook will be given adequate importance. The research process would include detailed bottom-up analysis of the respective sector, company’s market position, track record of the management, corporate governance track record and growth outlook in profits.
Debt and money market instruments
While investing in debt and money market instruments, the scheme is said to invest in companies depending upon various criteria such as, sound professional management with good track record, industry scenario, growth prospects, liquidity of the securities, etc.
While investing, it will emphasise more on well-managed and good quality companies with an above average growth prospectus whose securities can be purchased at a good yield and whose debt securities are concerned investments (wherever possible) will be mainly in securities listed as investments grade by a recognised authority like CRISIL, ICRA, CARE, etc.
Commodities
Long-term investments in commodities will be based on the commodity fundamentals driven by comprehensive research studies, demand-supply, roll-over cost mechanism and other macro-economic factors. On the other hand, short-term investment strategy will be to capture arbitrage opportunities, price corrections or other event-based opportunities in the market.
Fund Manager
This fund will be co-managed by Rahul Singh who will primarily manage the unhedged part of equity portfolio, Sailesh Jain will manage the hedged/derivative part of equity portfolio, Murthy Nagarajan will manage the debt portfolio and Aurobinda Prasad Gayan will manage the commodity portfolio. Following is the performance of other funds managed by these fund managers:
|
Fund
|
Fund Manager
|
Returns (per cent)
|
|
1-Year
|
3-Year
|
5-Year
|
|
Tata Balanced Advantage Fund
|
Rahul Singh
|
8.76
|
N/A
|
N/A
|
|
Tata Digital India Fund
|
Sailesh Jain
|
5.55
|
19.56
|
N/A
|
|
Tata Equity Savings Fund
|
Sailesh Jain
|
9.10
|
5.17
|
4.94
|
|
Tata India Pharma and Healthcare Fund
|
Sailesh Jain
|
17.54
|
4.70
|
N/A
|
|
Tata Resources and Energy Fund
|
Sailesh Jain
|
18.70
|
4.22
|
N/A
|
|
Tata Arbitrage Fund
|
Sailesh Jain
|
6.47
|
N/A
|
N/A
|
|
Tata Short-Term Bond Fund
|
Murthy Nagarajan
|
9.93
|
5.12
|
6.43
|
|
Tata Gilt Securities Fund
|
Murthy Nagarajan
|
12.53
|
7.04
|
7.26
|
Our Recommendation
Multi asset allocation strategy is indeed proven to be beneficial in the long run. However, being an NFO and technically no true peers available, unless they deploy the assets, we cannot comment on its performance. We believe that you should invest in a fund which has at least been through two market cycles. However, if you are an moderately aagressive to aggressive risk taker and all your financial needs are taken care of, then you may consider participating in this NFO. Nevertheless, before investing in any fund, you should check if it suits you in terms of your risk and returns profile.