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Aarati Krishnan

THE Tata Equity Opportunities Fund has delivered a return of 44 per cent since March 2003, when it was restructured as an open-end equity fund. Its track record before this period was uninspiring. The recent returns have come mainly from focused exposures in mid/small-cap stocks.

Given its new investment objectives and the profile of the stocks in its portfolio, the fund is unsuitable for investors with low, or even a medium-risk appetite.

Such investors can use the recent surge in NAV to book profits in the fund.

Investors with a high-risk appetite can stay with the fund, as its performance has improved since the change in management.

However, even for such investors, the dividend option may be a better choice than the growth option.

Regular dividend payouts by the fund may ensure that investors are able to convert part of the returns from the fund into cash whenever there is a sharp NAV surge.

Performance: In its earlier avatar as Ind Taxshield, a close-end tax saving scheme managed by Indian Bank Mutual Fund, the fund had an indifferent track record. It migrated to Tata Mutual Fund in the end of 2001. In March 2003, Tata Mutual Fund restructured the scheme.

It was converted from a close-end tax saving scheme, to an open-end equity fund. It now has a more aggressive focus than the normal diversified equity fund. It aims at identifying stocks with a "growth" momentum-ahead of the market-and taking focused exposures in them.

The NAVs of the "dividend" and "appreciation" options of the fund stood at Rs 8.64 per unit and Rs 7.72 per unit respectively in March 2003, when the fund was restructured. Since then, the portfolio has been packed with small/mid-cap stocks.

This has paid off in the form of high returns of about 44 per cent over the past five months. However, both the nature of the fund and the nature of stocks in its portfolio, suggest that these returns carry a significant degree of risk.

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