RETAIL RESEARCH

MUTUAL FUND SCHEME ANALYSIS

23 Feb 2016

Tata Ethical Fund

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Key Points:

Unit Growth of investments Vs. Benchmark

(Rebased to 100)

Tata Ethical Fund is a better performing scheme from Equity thematic - Shariah category. Shariah Funds
are equity oriented mutual funds investing in the companies as guided by the Islamic investment
philosophy. These funds provide investors a socially responsible form of investing by allocating in
companies which are in compliance with the Shariah norms. They do not invest into the companies in
the business of tobacco, alcohol and gambling, etc. The portfolios of the schemes are monitored
rigorously on frequent intervals to check adherence to Shariah principles.
There are 3 schemes including one ETF coming under this category. Medium to high risk investors who
are looking for suitable investment opportunities in the equity side that comply with Shariah norms may
consider these schemes. Though the investment strategy of these schemes in compliance with the
Muslim Shariah norms, the philosophy syncs also with the beliefs of and ethics practiced by the Jain
community.
Shariah is the moral code and religious law of Islam. Shariah deals with many topics addressed by secular
law, including crime, politics, and economics, as well as personal matters such as hygiene, diet, prayer,
and fasting. Shariah principles require the investments to be based on certain norms and filters related
to the public need, fairness in business, and ethical source of income.
Shariah principles require exclusion of certain business activities related to Alcohol, Tobacco, Companies
involved in paying and receiving interest like Banking industry, Gaming / Gambling / Casino / Games of
Chance, Non-halal Food Products and Entertainment and Leisure Related To Pornography or Adult
Content.

Fund Performance Vis-a-vis Benchmark (Excess return):

Tata Ethical Fund registered -9%, +18% and +14% of CAGR returns for one, three and five year periods
while the Nifty 50 Shariah Index posted -11%, +10% and +7% of returns respectively. For the same
period, the peer schemes clocked -11%, +15% and +10% of returns respectively.
Portfolio: INFY, Hindustan Unilever Ltd and TCS are the stocks that topped in its latest portfolio having
weights of 5.73%, 3.94% and 3.61% to its net assets respectively. In the last six month period, the scheme
added 9 new stocks and exited from 3 stocks. The Turnover ratio of the scheme stood at 5%.
The expense ratio of 3.01% for the scheme is higher compared to its peer that of 2.24%. The corpus of
the scheme as per latest data (Jan 2016) was at Rs. 407 crore. The scheme is managed by Mr. Pradeep
Gokhale.
As far as risk measures are concerned, the scheme seems to be higher while compared to peers as it
generated 13.01% (category 13.96%) of Annualized Standard Deviation that generated for last 3 years
period.

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Relative performance of the Scheme:
Point to Point and Rolling returns of the scheme versus peers and benchmarks over the various time frames:
Latest
Total No of
Expense
Corpus (Rs
Equity
Ratio (%)
Crs)
Holdings

Scheme's
Age (Yrs)

Benchmark

Tata Ethical Fund - (G)

19.79

Nifty 500 Shariah

407

62

Taurus Ethical Fund - (G)

6.92

S&P BSE 500

27

GS Shariah BeES

6.96

Nifty 50 Shariah

Scheme Name

Trailing Returns (%)

Rolling Returns (%)

Standard
Deviation
(Annualised)

3.01

1 Year
CAGR
-8.91

3 Years
CAGR
17.60

5 Years
CAGR
13.95

7 Years
CAGR
23.13

6 Month
Absolute
7.20

1 Year
CAGR
17.02

2 Years 3 Years
CAGR
CAGR
13.25 12.89

41

2.70

-14.38

16.25

9.80

8.71

17.72

14.28

12.14

15.00

19

1.00

-10.99

9.82

6.80

5.16

10.25

9.50

9.03

13.87/0.65*

2.24

-11.42

14.56

10.18

23.13

7.02

14.99

12.34

11.35

Nifty 50

-18.56

6.76

5.50

13.50

4.48

10.72

9.62

10.19

Nifty 50 Shariah

-10.75

9.89

6.63

14.42

13.01

Benchmarks:
Average of Shariah funds

* is Tracking Error.
3 Year Rolling returns generated from 5 Yrs historical NAV & calculated for multiple periods:

Relative performance during various market cycles:

Rolling returns that calculated from multiple periods could show the clear picture that how
consistently the schemes showed better returns.

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Portfolio Positioning:
Portfolio Market cap break-up over periods:

Top ten stocks held by the scheme:

Portfolio Sector break-up of the scheme over periods:

Riskometer:

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Category Performance:
Risk as measured by Standard Deviation (Ann) calculated from last 3 Yrs periods:

Year on Year performance of the Major categories in Equity Oriented Mutual Funds:

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Relative performance of the Sector indices based on the 3 year rolling returns that calculated from 5 years NAV history for multiple set of periods:

Rolling returns that generated from multiple periods would give us a clear picture on the consistency of the schemes on generating the returns historically. The chart shown above is
plotted from the 3 year rolling returns data that calculated from the 5 years NAV history.

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Relative performance of the sector indices based on year on year returns (calendar year):

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Relative performance of the sector indices based on various equity market cycles:

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Analyst: DhuraivelGunasekaran (dhuraivel.gunasekaran@hdfcsec.com)

Source: NAVIndia.com& ACEMF

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HDFC securities Limited, I Think Techno Campus, Building - B, "Alpha", Office Floor 8, Near Kanjurmarg Station, Opp. Crompton Greaves, Kanjurmarg (East), Mumbai 400 042 Phone: (022) 3075 3400 Fax: (022) 2496 5066 Website: www.hdfcsec.com Email:
hdfcsecretailresearch@hdfcsec.com.
Disclaimer: Mutual Funds investments are subject to risk. Past performance is no guarantee for future performance.This document has been prepared by HDFC Securities Limited and is meant for sole use by the recipient and not for circulation. This document is not to be reported or
copied or made available to others. It should not be considered to be taken as an offer to sell or a solicitation to buy any security. The information contained herein is from sources believed reliable. We do not represent that it is accurate or complete and it should not be relied upon as
such. We may have from time to time positions or options on, and buy and sell securities referred to herein. We may from time to time solicit from, or perform investment banking, or other services for, any company mentioned in this document. This report is intended for non-Institutional
Clients.
This report has been prepared by the Retail Research team of HDFC Securities Ltd. The views, opinions, estimates, ratings, target price, entry prices and/or other parameters mentioned in this document may or may not match or may be contrary with those of the other Research teams
(Institutional, PCG) of HDFC Securities Ltd. HDFC Securities Ltd. is a SEBI Registered Research Analyst having registration no. INH000002475.

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