What is the investment objective of Tata Balanced Fund?
The investment objective of the scheme is to provide income distribution and/or medium to long term capital gains while at all times emphasising the importance of capital appreciation. 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.
What is the technique followed to manage the equity-debt balance in this fund?
We don’t really want to time the markets and thus do not try to dynamically manage the equitydebt mix of the fund. The equity component of the scheme is kept between 70-75 per cent of the AUM (as against the permissible lower limit of 65 per cent) and balance is invested in debt.
What is the investment universe of the fund?
The equity component is managed like a diversified equity fund with a mix of large and midcap stocks.
What kind of stocks never enter the portfolio?
There is a saying, ‘Never say never’, and this is true in the investment business also where there are examples of companies staging smart turnarounds from the brink of bankruptcy. That apart, generally I try to avoid businesses with low entry barriers or where the level of value addition by managements is low, companies with high debt levels and history of capital misallocation.
What has aided in the fund’s superior performance in the past 1-3 years?
The fund primarily follows a growth and quality philosophy. Its portfolio is dominated by companies with sustainable earnings growth potential over a medium term. Companies which have some moats like brands, distribution franchise, technology leadership, efficient cost structure. Management that have good execution capabilities and prudence in capital allocation and companies with good financials such as healthy return ratios, good cash generation and prudent debt levels. At times, the fund has remained invested in such companies even at slightly higher valuation. The fund has been successful in avoiding companies with weak earnings/financial strength even though valuations may appear cheap.
olmdesk@outlookindia.com
