Rupesh Patel, fund manager, Tata India Tax Savings Fund, says that the endeavor is to buy companies with compounding characteristics at reasonable price and remaining invested as the company grows.
What is the investment strategy for the fund?
The investment strategy for the fund is to run it as a diversified equity fund with bottom up approach to stock picking. The objective is to generally buy businesses which have compounding characteristics, strong growth potential, good capital efficiency and are run by competent management teams. At the same time fund will not shy away from taking opportunistic exposure to special situations arising out of market or stock specific developments.
What is included in the portfolio and what is avoided?
As mentioned above, the endeavor is to buy companies with compounding characteristics at reasonable price and remaining invested as the company grows. The fund invests with long term view on the businesses and their underlying value. It desists from taking short term calls and investing depending on market moods.
Tax planning funds have a different redemption pattern given the three year lock-in compared to the diversified equity schemes. How much does this factor play a role in fund management and investment? Does it have any bearing on cash allocation?
Our fund management philosophy does not believe in taking significant cash calls and trying to time the market as we believe, over a longer period wealth creation happens by buying good businesses at right prices and staying invested. The three year lock in period for tax funds does not change our approach to investing.
What will you attribute the relative consistent performance of your fund in recent years?
Tata India Tax Savings Fund has delivered a consistent performance by sticking to the above stated investment philosophy of buying quality businesses at right prices and remaining invested. Our focus on quality companies helped the fund protect downside during not so good times for the market and that has been a major contributor to the long term performance. For consistent long term returns it is important to make lesser mistakes and all the more important to keep the losses low, when you make mistakes.
Any tactical miss you regret (not having, or not having enough or holding something) in your portfolio?
In terms of tactical positioning, during the first half of CY'14, fund's exposure to midcaps and cyclicals was relatively lower and hence to that extent the fund underperformed some of its peers.
Please click here to read the analysis of this fund.
This article was originally published on June 14, 2016.
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