Tata Equity P/E Fund

The financial market is filled with different options when it comes to investments. Investors can choose an investment plan as per their short-term or long-term goals. The Tata Equity P/E Fund is an open-ended equity scheme that follows a value investment strategy to provide long term capital appreciation.

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Investment is made in equity and equity-related instruments of companies whose rolling P/E is lower than the rolling P/E of S&P BSE Sensex.

The fund is rated as highly risky, and investors are advised to be informed that their principal would be at very high risk. Mutual Funds, in general, involve a considerable amount of risk. In the case of the Tata Equity P/E Fund, the price of securities may fluctuate depending upon various market factors. 

Tata Equity P/E Fund Facts

The following table shows some basic facts about the Tata Equity P/E Fund:

Fund House

Tata Mutual Fund

Launch Date

June 29th, 2004

Benchmark 

S&P BSE Sensex TRI

Fund Type

Open-Ended Value Oriented Equity Fund

Risk Rating

Very High

NAV as on November 12th, 2021

Rs.204.964

Expense Ratio

1.97%

Turnover 

46.00%

Risk Grade

Average 

Return Grade

Below Average

Investment Objective

The Tata Equity P/E Fund scheme aims at providing income distribution and/or capital appreciation over medium or long term capital gains. 

The fund seeks to provide capital appreciation by investing 70% of its total assets in stocks. Such stocks have a trailing P/E ratio less than that of the BSE Sensex Total Return Index.

To achieve this objective, the fund’s asset allocation consists of 94.06% investment in equity, no investment in debts and 5.97% investment in cash and cash equivalents. Investment in derivative instruments may be made for trading as well as hedging and portfolio balancing. 

The fund would have a maximum derivative net position of 50% of its total assets. Investment in securities lending would not be more than 25% of the fund’s total assets. 

Fund Summary

Tata Equity P/E Fund offers the following two types of funds:

  1. Tata Equity P/E Fund – Regular Plan

    • Risk: Very High

    • Expense Ratio: 1.97%

    • Net Asset Value (NAV): 0.68% as of November 12th, 2021

    • Returns (1 year): 42.29%

    • CAGR (Since Inception): 18.93% 

  2. Tata Equity P/E Fund – Direct Plan

    • Risk: Very High

    • Expense Ratio: 0.89%

    • Net Asset Value (NAV): 0.68% as of November 12th, 2021

    • Returns (1 year): 42.85%

    • CAGR (Since Inception): 18.00%

Fund Return Summary

The following table shows the returns produced by the Tata Equity P/E Fund:

Period Invested For

Absolute Returns

Annualized Returns

1 week

0.76%

-

1 month

0.56%

-

3 months

11.72%

-

6 months

23.58%

-

Year To Date

30.68%

-

1 year

41.27%

41.28%

2 years

48.41%

21.79%

3 years

59.90%

16.89%

5 years

97.40%

14.56%

10 years

368.91%

16.70%

Since Inception

1935.82%

18.93%

*Returns are subject to change. The investment risk in the investment portfolio is borne by the policyholder.

Pros and Cons

The following table shows the pros and cons of the Tata Equity P/E Fund:

Pros

Cons

Low expense ratio

Very high-risk factor

3 year annualized returns are higher than category average

1 year annualized returns are lower than category average

5 year annualized returns are higher than the category average

For units worth more than 12% of the investment, a 1% exit load would be charged for redemption within 365 days

Low stamp duty

Investments cannot be redeemed in less than 5 years

Fund has performed well over the long-term by investing more in the large-cap space

The fund has a return grade that is below average

Benefits of the Tata Equity P/E Fund

Following points enlist the benefits which the Tata Equity P/E Fund has:

  • Redemption: The Tata Equity P/E Fund dispatches redemption proceeds for the investor within 10 days of the date on which the redemption request has been accepted by an Authorized Center of Tata Mutual Fund. The cheque is issued in the investor’s name.

  • No Entry Load: The Tata Equity P/E Fund does not charge entry load from its investors. This means they do not have to pay anything for joining any of the two schemes of the fund.

  • Risk Mitigation: The fund has a very high-risk rating; therefore, the fund house needs to take risk mitigation measures to protect the investors’ investment. Tata Equity P/E Fund has separate strategies for mitigating equity investments and other related investments.

  • The facility of SIP Investment: The Tata Equity P/E Fund offers the facility of investing in SIPs for their customers. The minimum limit for investing in a SIP is Rs.500. This way, investors can invest a fixed amount of money regularly in mutual funds of their choice.

  • Long Term Capital Appreciation: The Tata Equity P/E Fund helps its investors to increase the price and value of their assets with the help of long term capital appreciation. This provides long term growth of the investor’s portfolio by increasing the value of the invested principal.

Who Should Invest in the Tata Equity P/E Fund?

The following points discuss what kind of investors should opt for the Tata Equity P/E fund:

  • The Tata Equity P/E Fund is suitable for investors who have ample knowledge about macro trends in the market and are willing to take high risks for high returns.

  • The Tata Equity P/E Fund is ideal for investors who are ready for the possibility of moderate to high losses in their investments.

  • Investors who believe in the value style of investing must opt for the Tata Equity P/E Fund. A value investment strategy involves choosing stocks that appear to be trading for less than their intrinsic or book value.

  • This fund would be a perfect fit for investors who are looking to invest in good stocks at cheap valuations, as opposed to cheap stocks.

  • Investors who prefer a core portfolio are a good match for the Tata Equity P/E Fund.

In Conclusion

The Tata Equity P/E Fund follows the value-based style of investing. The fund aims to invest a minimum of 70% assets in companies that have a rolling 12-month price-to-earnings ratio lower than the rolling 12-month price-to-earnings ratio of the BSE Sensex. 

Apart from using the P/E ratio, the fund uses several other quantitative and qualitative screens to invest in companies. All this is in view to provide the investor with increased value for their assets.

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