This document summarizes a blog post reviewing the Tata Focused Equity Fund new fund offer (NFO). It provides details on the features of the fund such as it being an open-ended multi-cap equity scheme investing in a maximum of 30 stocks across market capitalizations. It will open for subscription from November 15-29, 2019. The document discusses the fund's investment objective, eligible investors, fund manager, benchmark, asset allocation and performance of comparable multi-cap funds. While the focused approach may provide benefits, the writer suggests investing in established multi-cap funds due to the new fund's uncertain future performance.
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Tata Focused Equity Fund NFO – Should you invest?
November 16, 2019 Suresh KP
Tata Focused Equity Fund NFO Review
Tata focused equity mutual fund scheme
would open for subscription on 15
November, 2019. This mutual fund is a
multi-cap mutual fund scheme that invests
up to 30 stocks across various market
capitalizations. It has come up with
caption “take the blur out”. There are
currently several multi cap mutual funds in
India. In this current scenario would Tata
Focused Equity Fund NFO attract investors?
What are the features of Tata focused Equity Fund? Should you invest in Tata focused
Equity Fund?
Also Read: Where to invest money for short term?
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Features of Tata focused Equity Fund NFO
This is an open-ended mutual fund equity scheme.
This scheme would open for subscription on 15 November, 2019
This scheme would close for subscription on 29 November, 2019.
Since this is an open ended scheme, it would again open for subscription after 5-8
business days after the NFO closure date.
This scheme is available in both regular and direct plans.
This plan offers both growth option and dividend option.
This scheme is available for lump sum and SIP investment.
Minimum investment is Rs 1,000 and in multiples of Rs 1 there-off for lump sum
investments.
Minimum investment is Rs 150 per month for monthly SIP and for a tenure of 12 months.
The NAV of the NFO is Rs 10 per unit now during initial subscription.
There is no entry load to invest in this mutual fund scheme.
There is an exit load of 1% if the mutual fund units are redeemed within 365 days.
This scheme is classified as MODERATELY HIGH risk scheme.
Scheme total expense ratio (TER) is estimated up to 2.6% (2.25%+ 0.35%) of the total
assets on any day.
Tata focused Equity Fund Draft details can be downloaded from here.
What is the investment objective and strategy of Tata focused Equity Fund NFO?
The objective of the MF is to generate long term capital appreciation by investing in
equity & equity related instruments of maximum 30 stocks across various market
capitalizations.
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3. However, there is no assurance or guarantee that the investment objective of the Scheme
will be achieved. The scheme does not assure or guarantee any returns.
Who is eligible to invest in this new mutual fund scheme?
The following is eligible to invest in this new fund.
1) Resident individuals, either singly or jointly.
2) Minors through Parents/ Legal Guardian.
3) Hindu Undivided Family (HUF) through its Karta.
4) Partnership Firms in the name of any one of the partners.
5) Proprietorship in the name of the sole proprietor.
6) Companies, Body Corporate, Societies, Association of Persons, Body of Individuals,
Clubs and Public Sector Undertakings registered in India if authorized and permitted to
invest under applicable laws and regulations.
7) Banks
Complete list of eligible participants who can invest can be checked in prospectus of this
new fund offer.
Who is the Fund Manager of Tata focused Equity Fund?
The Fund Manager is Mr. Rupesh Patel. Currently Rupesh Patel manages funds like Tata
Midcap Growth Fund, Tata Large Cap Fund, Tata India Tax Savings Fund, Tata Infrastructure
Fund and Tata Ethical Fund & Tata Offshore India Sharia Scheme.
You may like: Best ELSS Mutual Funds to invest in 2019 to save tax
What is the benchmark for this scheme?
The benchmark for this scheme is S&P BSE 200 TRI.
What is the allocation pattern in this mutual fund scheme?
This fund investment pattern is as follows:
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4. 1) It invests 65% to 100% in equity and equity related securities and maximum of 30 stocks
across market capitalization. The risk profile in this segment is medium to high.
2) It invests 0% to 35% in debt and money market instruments. The risk profile in this
segment is low to medium.
3) It invests 0% to 10% in units of REITs and InvITs. The risk profile in this segment is
medium to high.
Can NRI invest in this MF scheme?
Yes, they can invest in this scheme. They can invest on repatriation or non repatriation
basis.
Why to invest in the Tata focused Equity Fund?
Here are a few reasons to invest in this fund.
1) This fund is a multi-cap that invests in large cap, midcap and small cap stocks which
provides diversification.
2) This mutual fund invests maximum of 30 stocks which can help to focus on a limited
number of stocks by the fund manager. Such strategy can help to maximize returns
instead of large number where one can loose focus.
Major risk factors you should consider before investing in such funds
One should consider some of these risk factors / negative factors before investing.
1) The fund invests in mid-cap and small-cap stocks which may under perform in the short
to medium term. Currently we are already seeing this downfall in these 2 sectors.
2) This fund invests in REITs and InvITs which are high risk.
How is the Performance of Multi Cap Mutual Funds?
Now, let us look at existing Top 5 Multicap mutual funds based on last 5 years returns.
#1 – Motilal Oswal Multicap 35 Fund: This mutual fund gave 13% annualized returns in
the last 5 years and 11% annualized returns in the last 3 years and 12% returns in the last 1
year.
#2 – Axis Focused 25 Fund: This mutual fund gave 13% annualized returns in the last 5
years and 18% annualized returns in the last 3 years and 20% returns in the last 1 year.
5. #3 – SBI Focused Fund: This mutual fund gave 12% annualized returns in the last 5 years
and 13% annualized returns in the last 3 years and 18% returns in the last 1 year.
#4 – Parag Parikh Long Term Equity Fund: This mutual fund gave 12% annualized returns
in the last 5 years and 13% annualized returns in the last 3 years and 15% returns in the
last 1 year.
#5 – SBI Magnum Multicap Fund: This mutual fund gave 11% annualized returns in the last
5 years and 11% annualized returns in the last 3 years and 14% returns in the last 1 year.
If you observe, top funds are performing almost in similar line in the last 3-5 years.
Should you invest in the Tata focused Equity New Fund Offer?
Tata Mutual Funds has come up with this Focused Equity Fund to encash opportunities in
Multicap segment. Investing in Multicap mutual fund is a good idea which can help like
diversification within your portfolio. However, one should note that new funds do not
have past performance, hence difficult to say whether this fund would perform well in
future or not. If you want to take risk and test such fund, you can invest now.
Alternatively, you can invest in some of the Best Multicap Mutual Funds in 2019 that are
already existing and proven the performance in the last 5-10 years.
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Suresh KP
Tata focused Equity Fund NFO Review
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