Tata Hybrid Equity Fund is Lagging Behind the Peers. Should You Worry?

Because of its glorious past, Tata Hybrid Equity Fund has a separate fan base. Thousands of successful investors have enjoyed the consistent returns it has delivered since inception in 1995. However, few investors are doubtful to continue their investment in Tata Hybrid Equity Fund as it has been unable to perform well in the market conditions of the last few years. Recently, the fund climbed back by a slight margin but investors are still dicey to invest further. The experts at MySIPonline have taken a deeper look into this situation to assist the investors in making a better decision regarding investment in Tata Hybrid Equity Fund.

What is Tata Hybrid Equity Fund?
Before making any decision concerning the fund it is essential to know the details of the mutual fund. Tata Hybrid Equity Fund is an aggressive hybrid mutual fund or equity-oriented hybrid fund. It was previously by the name of Tata Balanced Fund. It generally maintains a ratio of 75:25 between equity and debt allocation respectively which can also be extended to 70:30 under certain conditions. The portfolio of the fund mostly comprises of large-cap stocks from various sectors. The debt securities are of high credit ratings and aim to control the volatility of the fund.

Why is it Unable to Perform?
Tata Hybrid Equity Fund used to be a top performer in the category, but for the last few years it has lost its ratings due to the underperformance of the selected stocks. The fund previously had a lesser allocation in the financial sector and relied more on the undervalued stocks. Growth At Reasonable Price (GARP) is the stock selection strategy of the fund which allowed the fund to gain high returns in the past but didn’t seem beneficial in the last few years. However, in recent trends, the fund has recovered from the downtrends due to a slight change in the portfolio and increase in the allocation towards the financial sector. The trailing returns of the last 3 years are 8.90% and that of 1 year is 4.93% while for the same tenure, the category average has been 12.12% and 5.76% respectively. However, the long term returns of 10 years or more are still among the best in the category and well above the peers & index.

What Should be Done?
Tata Hybrid Equity Fund aims for long term capital appreciation through a mixed portfolio of equity and debt instruments. The fund has a conservative portfolio but can provide significant returns in the long term. The current portfolio is looking in a good shape and can provide a money-making opportunity to the new investors. Those who are already invested can accumulate for a few months as the market is on the rise and the same fund can be quite beneficial looking at the recent rally. In the last one month, the NAV has surged by 6.05% which is likely to increase further in the upcoming trading sessions. Those who seek higher returns can switch to a more aggressive scheme depending on the suitability.  (data as of 30th March 2019)

Tata Hybrid Equity Fund is a promising scheme in the aggressive hybrid category which has faced a pullback in the last few years but is set to gain the reputation it had in the past. To know whether the fund is the right choice for you, connect with the experts at MySIPonline. For a seamless investment experience and to stay updated with the latest updates in the market, download our android and IOS app through the link provided.

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