Tata Absolute Return AIF
Tata AMC PMS | Alternatives | | AIFIME's View on Tata Absolute Return AIF
Strategy
Fairly Conservative Strategy
Investment Fund
We recommend waiting for the longer-term track to be established, especially around the long-short strategies' ability to deliver the outperformance required to meet the targeted returns
Fund's Strategy View
Tata Absolute return aims to deliver Liquid + 7.5% returns (~12-13% pre-tax returns) at 1/3rd of Nifty's volatility. The portfolio is constructed like an equity savings fund - 65-70% in fixed income, with the balance 30% in equity (with an added layer of being able to hedge this portfolio and even go naked short). A substantial allocation to fixed-income securities makes it difficult for the 12-13% pre-tax target returns to be met. This requires substantial outperformance on the equity + hedge portfolio.
Fund Performance
The fund has underperformed peers & is amongst the worst performing schemes in this category in the last 5 year trailing returns.
IME's View on Tata AMC PMS
View on AMC
Tata MF's PMS division lacks scale and independence, impacting its ability to benefit from the mutual fund's strengths. Without clearer definition and focus, we do not recommend investing in Tata PMS.
AMC's Pedigree
Tata PMS is the PMS division of Tata AMC. Despite having a strong brand in India, Tata has faced challenges in growing their AMC business. They have experienced high turnover of senior fund managers and have struggled to scale their PMS business.
AMC Team
Tata PMS has inexperienced investment team.
Investment Philosophy
There is no specific stated investment philosophy at the PMS level.
Investment Philosophy
TATA Absolute Return Fund aims to provide the fund with consistent returns and liquidity. The strategy follows a blend of fundamental, quantitative, and macro strategies for identifying trading opportunities. The strategy is large cap focused and attempts to produce additional returns while retaining a low degree of volatility. The portfolio allocation is built to reduce volatility and drawdowns through asset combinations – Equity, Fixed income, and a Hedge (derivatives) portfolio. Expectations from Tata Absolute Return Fund Generate 'Liquid + 7.5%' return per annum while keeping the volatility at less than 1/3rd of Nifty.Portfolio Construction
The portfolio is a combination of a fixed income portfolio with an equity long-short overlay.FIXED INCOME PORTFOLIO (65-70% allocation)
- Allocation: substantial part of the AUM in low risk fixed income instruments such as liquid mutual funds, government bonds, PSU & tax-free bonds, corporate bonds etc
EQUITY LONG-SHORT PORTFOLIO (-20% to 35% net equity allocation)
- Long-Short Objective: aim to produce additional returns, while retaining low degree of volatility | will maintain a low net equity exposure | idea is to supplement fixed income returns by 5-10% p.a.
- Long Strategy (30-35%): large-cap focused
- Short Strategy (0-50%): via highly diversified stock derivatives (60-70 positions) | have the option to go net short in terms of net equity exposures
Trailing Performance
| 1yr | 3yr | 5yr | Since Inception | |
|---|---|---|---|---|
| Tata Absolute Return AIF | 10.7 | 9.6 | 9.5 | 8.6 |
Performance as of: 30-Sep-25 | Inception Date: 12-Apr-19 | Performance are post-fees, pre-taxes. Global funds denominated in USD or fund currency.
Investment team
Tejas Gutka | 3-star rated FM
Head of Portfolio Management | 19 yrs Experience | 6 yrs at current firm
Past Experience: Portfolio Manager & Head of Equitiy (Tamohara Investment Managers), Head of Research (tamohara Investment Managers), Assistant VP -Investment Advisory Services (Barclays Wealth and Investment Management), Assistant VP, Research (Barclays Wealth and Investment Management), Manager (CARE Ratings)
Tejas Gutka comes with 14 years of experience, started as a Credit Rating Analyst at CARE Rating. He later went to take the role of Equity Research Analyst at Barclays Wealth and Investment Management and Portfolio Manager at Tamohara Investment Managers before joining Tata PMS in December 2019.
