Tata Absolute Return AIF
Our view on the fund, the AMC, the strategy, the performance & the investment team.
IME's Review of Tata Absolute Return AIF
| Fund Rating | Strategy Rating | Performance Rating |
|---|---|---|
Upgrade | Upgrade | Upgrade |
View on the 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
Strategy
Fairly Conservative Strategy
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 aim is to produce consistent returns irrespective of market conditions. The fund aim not to take directional calls but rather have a neutral exposure to equities and generate returns via futures & options strategies.
Trailing Performance
| 1yr | 3yr | 5yr | Since Inception | |
|---|---|---|---|---|
| Tata Absolute Return AIF | 9.2 | 8.7 | 9.3 | 8.3 |
Performance as of: 31-Jan-26 | Inception Date: 12-Apr-19 | Performance are post-fees, pre-taxes. Global funds denominated in USD or fund currency.
Investment team
Harsh Agarwal | 4-star rated FM
Fund Manager | 24 yrs Experience | 7 yrs at current firm
Past Experience: Portfolio Manager (Reliance Securities), Principal Research Analyst (Vistasoft India)
Harsh Agarwal is a specialist in equity hedge fund strategies. He joined Tata Asset Management in November 2018 as Head of Alternative Strategies. Started the alternatives business with launch of Tata Absolute Return Fund in April 2019. Through Tata Absolute Return Fund, Harsh introduced the Equity market-neutral investing strategy to the investor community. His prior stint includes working as Portfolio Manager‚ Equity long/short strategy at Reliance Securities where he managed equity long/short portfolio and generated consistent high returns. Harsh received his training in equity investments and hedging strategies while working for Deutsche bank's trading desk and Roc Capital Management USA. He is an MBA (Finance) from Symbiosis, Pune and also done courses in Certified Portfolio Manager and Certified Treasury Manager from The Institute of Chartered Financial Analysts of India University.
IME's Review of Tata Alternatives
| AMC Rating | Pedigree Rating | Team Rating | Philosophy Rating |
|---|---|---|---|
Upgrade | Upgrade | Upgrade | Upgrade |
View on AMC
Tata Alternatives focuses on long-short strategies, and is lead by a CIO (Harsh Agarwal) who does come with a past track record in long-short investing. The AIF manages 2 strategies - an Absolute Return Fund, and a long-biased long-short strategy. Tata's AIF has scaled better than it's PMS and does offer a differentiated strategy, but we do call out the dependence on the CIO - Harsh Agarwal (since it can be challenging to find quality long-short talent in the market).
AMC's Pedigree
Tata Alternatives is the alternatives arm of Tata AMC. The AMC has built it's credentials since the launch of it's first fund in 2019, with the strategies having achieved a reasonable level of scale based on the stability of the CIO and reasonable performance.
AMC Team
Tata Alternatives is led by Harsh Agarwal, a long–short specialist with over a decade of experience in the segment, who also played a key role in setting up and building the alternatives platform at Tata AMC.
Investment Philosophy
There is no single overarching investment philosophy at the AMC level, which is common across many alternatives platforms, where frameworks and philosophies are typically designed on a strategy-by-strategy basis rather than being centrally defined.
Investment Strategy
Tata Absolute Return Fund is structured to deliver consistent, liquid returns with controlled volatility by combining fundamental, quantitative, and macro-driven trading strategies. The strategy is primarily large-cap focused and is designed to generate incremental returns while maintaining a low volatility profile through diversified asset allocation across fixed income, equity, and hedging instruments. The stated return objective is to generate approximately “liquid + 7.5%” per annum, while keeping portfolio volatility to less than one-third of the Nifty.
Portfolio Construction
The portfolio is constructed as a fixed income core complemented by an actively managed equity long-short overlay, with asset combinations calibrated to limit drawdowns and smooth return profiles across market environments.
Fixed Income Portfolio (65–70%)
- Role in Portfolio: Acts as the stability and liquidity anchor of the strategy.
- Instruments: Allocation primarily to low-risk fixed income instruments such as liquid mutual funds, government securities, PSU and tax-free bonds, and corporate bonds.
Equity Long-Short Portfolio (–20% to 35% Net Equity Exposure)
- Objective: Generate incremental returns while maintaining low volatility, with net equity exposure kept structurally low and flexible.
- Return Contribution: Designed to supplement fixed income returns by approximately 5–10% per annum.
- Long Book (30–35%): Predominantly large-cap focused equity positions.
- Short Book (0–50%): Implemented through a highly diversified derivatives portfolio spanning roughly 60–70 positions, with the flexibility to move to net short equity exposure if required.
All-Season Return Orientation
The strategy is positioned as an all-season portfolio, aiming to generate returns across varying market conditions by combining a high fixed income allocation with an equity long-short framework that seeks to capture value creation opportunities while monetising potential wealth destruction through selective short positions.
AMC Background
Tata Asset Management Limited, the investment management arm of the Tata Group, operates its alternatives platform through Tata Alternatives, which manages Category III AIF strategies including equity long-short funds. Backed by the Tata Group’s multi-decade institutional legacy, the alternatives business benefits from strong governance standards, conservative risk culture, and access to one of the most established research and compliance infrastructures in the Indian asset management industry. Tata Alternatives is positioned as an institutional-grade platform rather than a boutique PMS-style operation, with a clear emphasis on process robustness, scalability, and regulatory discipline.
The long-short strategies are housed within Tata’s broader alternatives and quantitative investing ecosystem, drawing upon centralised risk management, independent valuation oversight, and a separation of portfolio management, risk, and operations functions. The platform is designed to cater to sophisticated investors seeking market-participative returns with controlled drawdowns, rather than pure alpha maximisation through concentrated directional bets. The AMC’s credibility is anchored not only in brand lineage, but also in its ability to institutionalise hedge-fund-like strategies within a tightly governed Indian AIF framework.
As an AMC, Tata Alternatives is positioned distinctly from promoter-driven or star-manager-led long-short funds. Its identity is rooted in team-based portfolio management, codified frameworks, and repeatability of outcomes across cycles.
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