Every week, we will talk about one fund that has been performing exceedingly well.

This becomes crucial as one is aware of the uncertainty the markets are going through at the current juncture. This week, we present to you, Tata Digital India Fund – Direct – Growth, managed by Tata Mutual Fund.

Let us delve deeper into the fund and chalk out key parameters based on which the fund has been in the spotlight.

1.Key Details

Before one starts investing in any mutual fund scheme, he/she needs to know some of its basic and critical features.

As the name suggests, Tata Digital India Fund operates in the universe of IT service companies and therefore invests in only these companies.

Key information about this fund are as follows:

Launch Date 28 Dec 2015
NAV (7th September 2018) 16.6
Plan Type Direct
Ratings by Groww 4 Star
AUM (Size) 197 crores
Riskometer High
Minimum SIP 500
Performance w.r.t. its Benchmark Has beaten its benchmark NIFTY IT TRI
Age of the fund 3 years old
Expense Ratio 1.05%
Exit Load If redeemed between 0 Days to 365 Days; Exit Load is 1%
Type Open Ended

2.Performance

Investment Objective

The investment objective of the scheme is to seek long-term capital appreciation by investing at least 80% of their net assets in equity/equity related instruments of companies, in the information technology sector in India. However, there is no assurance or guarantee that the investment objective of the scheme will be achieved.

The performance of the fund has been shown below:

Duration Returns
1 Year 70.0%
3 Years NA
5 Years NA

Since the fund was launched in 28th December 2015, last 3 and 5 year returns are not available. However, as seen from the historical data, this fund has given exceptional returns over the years and has consistently outperformed its benchmark.

3.Comparison

Let us compare this fund with other similar sectoral funds

Other similar funds Returns over the years Minimum SIP Investment Fund Size (Crs) Expense Ratio Rating
1Y 3Y 5Y
UTI Transportation and Logistics Fund – Direct – Growth 4.8% 13.7% 33.5% 500 1,620 crores 1.25% 5
DSP BlackRock Natural Resources & New Energy Fund – Direct (0.8%) 28.7% 26.4% 500 412 crores 2.11% 5
L&T Infrastructure Fund – Direct – Growth 5% 20.5% 28.4% 500 1,945 crores 1.58% 5
Sundaram Rural and Consumption Fund – Direct – Growth 4.6% 21.7% 25.3% 250 2,540 crores 1.48% 4

If one were to compare the returns of Tata Digital India Fund with funds in other sectoral funds, we see that Tata Digital India Fund has performed exceptionally well.

Given the depreciation of INR (crossed INR 72/ dollar); IT service companies have gained appreciated dollar revenue thereby boosting profits.

Similarly, these funds are expected to do well in the near future as well because the INR is expected to be at similar levels going forward.

On comparing the expense ratio of Tata Digital India Fund with other sectoral funds, we see that the expense ratio of Tata Digital India Fund is very low (i.e. 1.05%) as compared to all other sectoral funds, as highlighted above in the table.

4.Portfolio

One of the most instrumental things that mutual fund investors must focus on while looking for the ideal mutual fund is the portfolio of the respective fund.

There are two parts to the portfolio.

  • Holdings
  • Equity Sector Allocation and Equity Size Breakup

Top 10 Holdings

Name % of Assets Sector Instrument Rating/Size
Infosys Ltd. 27.1% IT Equity Large Cap
Tata Consultancy Services Ltd. 14.5% IT Equity Large Cap
Tech Mahindra Ltd. 7.7% IT Equity Large Cap
NIIT Technologies Ltd. 7.4% IT Equity Mid Cap
Tata Elxsi Ltd. 7.3% IT Equity Mid Cap
Persistent Systems Ltd. 6.0% IT Equity Mid Cap
Repo 4.9% Current Assets Equity
Oracle Financial Services Ltd. 4.4% IT Equity Large Cap
Cyient Ltd. 4.3% IT Equity Mid Cap
L&T Technology Services Ltd. 3.9% IT Equity Mid Cap

As can be seen, the top performers are companies which have provided exceptional results in the last few quarters (Infosys, TCS, and Tech Mahindra).

Few of these companies have also offered bonus shares as well as announced buybacks (Infosys, TCS). This highlights the robust position the companies are in at this point of time.

Equity Sector Allocation

equity sector allocation - Tata Digital Fund

Equity Size Breakup

Equity size breakup - Tata Digital Fund

5.Fund Managers

One of the key reasons for this scheme’s stellar performance over the last 1 year is its fund manager.

This scheme is managed by Dabesh Mistry.

Danesh Mistry is a B.Com graduate and also holds a Post Graduate Diploma in Business Administration.

Before he joined Tata AMC, he was associated with HDFC Limited (Jun 2002-Jan 2007) as Assistant Manager – Operations and ENAM Securities Limited (Feb 2007-Sep 2009).

Who should invest in this fund?

Amateur investors are suggested not to invest in Tata Digital India Fund or any other sector funds.

These funds are meant for slightly sophisticated investors. If someone really wants to take a call on the sector and is aware of the sector, then it is a good idea to invest.

Also, if you want to diversify your portfolio in the IT sector, then you can invest in this fund.

Conclusion

Tata Digital India Fund has beaten its peers in the past year by a wide margin.

It has given close to 70% returns in a year, while the funds in other sectors have generated low returns.

It has also beaten the NIFTY IT index by a considerable margin. Returns generated by NIFTY IT over the last year have been 57%; therefore Tata Digital India Fund has provided excess return to the tune of 13% as compared to the index.

Performance over the last year and consistency has made this scheme fund of the week.

Happy Investing!

Disclaimer: The views expressed in this post are that of the author and not those of Groww