Tata Small Cap Fund Direct Growth INF277K011O1

Tata Small Cap Fund earns an Above Average Process Pillar rating.

The largest contributor to the rating is the parent firm's five-year risk-adjusted success ratio of 63%. The measure indicates the percentage of a firm's funds that have beat their respective category's median return for the period. Excellent risk-adjusted performance also strengthens the process. This can be seen in the fund's five-year alpha calculated relative to the category index, which suggests that the managers have shown skill in their allocation of risk. However, the process is limited by its parent firm's subpar risk-adjusted performance, as shown by the firm's average 10-year Morningstar Rating of 2.9 stars. A lower star rating suggests that the firm has struggled to outperform on a risk-adjusted basis.

This strategy tends to hold smaller, deeper value companies than its average peer in the Small-Cap Morningstar Category. Examining additional factor exposure, this strategy consistently held some companies with relatively lower trading volume compared with Morningstar Category peers in the last few years. Less-liquid stocks might offer strong returns to compensate for their risks, but they can be harder and more expensive to trade in bear markets. Different from its historical appetite, however, the Liquidity factor was in line with the Morningstar Category average in recent months. This strategy has had more exposure to high-momentum stocks over its peers in recent years. Momentum approaches bet that rising stocks will continue to rise and that lagging stocks will continue to lag. Compared with category peers, the strategy also had more exposure to the Momentum factor in the most recent month. In addition, this strategy's holdings have included more companies with high dividend or buyback yields than peers over these years. High-yield stocks tend to be connected to more mature companies earning enough cash to return some to shareholders. At times, however, extreme market pressure can force them to cut their dividends, which hurts stock performance. Nevertheless, the fund's Yield exposure was in line with peers in the latest month. More information on a fund and its respective category's factor exposure can be found in the Factor Profile module within the Portfolio section.

The portfolio is overweight in basic materials and industrials relative to the category average by 6.7 and 3.8 percentage points, respectively. The sectors with low exposure compared with category peers are financial services and energy, with financial services underweighting the average portfolio by 6.3 percentage points of assets and energy similar to the average. The portfolio is composed of 61 holdings and is relatively top-heavy. Of the strategy's assets, 35.1% are concentrated within the top 10 holdings, compared to the typical peer's 13.7%. And finally, in terms of portfolio turnover, on a year-over-year basis, 15% of the fund's holdings have turned over, whether through increasing, decreasing, or changing a position.