Tata Young Citizen is an open-ended conservative balanced fund meant exclusively for minors. The scheme is redeemable after the child attains the age of 18 years and does not carry a load. The fund seeks to achieve long-term capital growth with a maximum 50 % exposure to equity and up to 50 % in debt instruments. While the scheme has retained a balanced portfolio, it has tilted in favour of debt instruments, which has averaged at 53 % since 1998. Further, this debt exposure has been in to high coupon corporate papers. While these papers gave a good pep to returns till 1999, their redemption and a fall in interest rates has now forced the fund to lock in debt instruments with lower yields. Since mid-1998, the fund has also been concentrated with its equity allocation, and has focussed on infotech, pharma and FMCG stocks. While the fund maintained a diversified flavour within the three sectors, the rally in ICE stocks since late 1999 saw the fund become extremely concentrated in these stocks. The sector accounted for a whopping 73% of the equity portfolio in February 2000, which has since been pruned to 54% in July 2000. With this strategy, the fund has posted a steady gain of 17.6 % since launch. Also, its conservative strategy has come in good stead and it has consistently lost less than the VR Balanced benchmark in the recent downturn. The scheme is tax-efficient since it offers only the growth option and hence, can afford to maintain less than 50% exposure to equities. Tata Young Citizens looks attractive for being adequately balanced and stable returns.
This article was originally published on September 04, 2000.
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