Tata India Innovation Fund opens for subscription on 11 Nov: Worth it?

The Tata India Innovation Fund will strategically target companies at the forefront of such transformative innovation that leverage research & development (R&D) and technologies like machine learning

Tata Asset Management on Friday launched the Tata India Innovation Fund that aims to offer investors with opportunities for long-term capital appreciation by investing in companies seeking to benefit from adoption of innovative strategies and themes across sectors. The NFO (New Fund Offer) will open for subscription on November 11, 2024.

 

The Tata India Innovation Fund will strategically target companies at the forefront of transformative innovation that leverage research & development and technologies like machine learning, artificial intelligence, digital transformation.

 

Why a Thematic fund based on innovation? 

 

"India’s financial services industry has harnessed Digital Public Infrastructure to usher the country into a new digital era, significantly expanding financial inclusion nationwide. In line with the global climate action standards, India’s electric vehicle (EV) sector, battery technology, and renewable energy segments are witnessing considerable investment and growth momentum. At the same time, substantial R&D investments in the pharmaceutical and healthcare sectors are positioning India as a global hub for research and manufacturing," Tata Asset Management said in a note. 

 

 

The Tata India Innovation Fund will employ a bottom-up innovation-led stock selection approach, offering both valuation comfort and growth potential. 

 

“Two things matter in investing: identifying a company which will be around for the next 10 + years and its ability to make money over the next decade.  Having just one of them is not enough.  Among other things, what gives them right to win is innovation. Thats the one thing which helps survival and growth. This comes through incremental and break through innovation.  Innovation gives competitive advantage and ability to stay ahead. India is at the forefront of digital,

manufacturing and services innovation leading to a great number of opportunities.  The fund aims to capture some of these opportunities in companies which aim to thrive and grow," said  Anand Vardarajan, Chief Business Officer at Tata Asset Management.

 

Fund Details

 

Scheme Name: Tata India Innovation Fund

 

NFO Dates (Tentative) NFO Opens: 11th November 2024 to 25th November 2024

 

Investment Objective

 

The investment objective of the scheme is to provide investors with opportunities for long term capital appreciation by investing in equity and equity related instruments of companies that seeks to benefit from

adoption of innovative strategies & theme. However, there is no assurance or guarantee that the investment objective of the scheme will be achieved. The scheme does not assure or guarantee any returns.

 

Type Of Scheme: An open-ended equity scheme following innovation theme.

 

Fund Manager Meeta Shetty and Kapil Malhotra (Overseas Exposure)

 

Benchmark Nifty 500

 

Min. Investment Amount Rs. 5,000/- and in multiple of Re.1/- thereafter

 

Exit load: 1 per cent of applicable NAV, if redeemed on or 90 days from the date of allotment. 

 

“India is witnessingtransformative changes across diverse sectors led by digitalisation in finance, health tech, automotive solutions, consumer tech, and beyond. Building on our steady rise in global innovation rankings, we are taking significant strides in areas like digital commerce, green mobility, EV battery infrastructure, space tech and advanced healthcare. The Tata India Innovation Fund is designed to harness these shifts, offering investors a chance to participate in the growth stories of companies leading this innovation wave," said Rahul Singh, Chief Investment Officer at Tata Asset Management.  But should you invest in thematic funds?  

Sectoral and thematic funds may be all the rage right now. However, it's best not to fall for their hype, according to Dhirendra Kumar of Value Research.

 

"This approach of chasing sectoral trends often leads to the cycle of buying high and selling low, as investors tend to enter sectors when they're peaking and exit when they've already declined. Moreover, consistently timing the market is extremely challenging even for professional investors, let alone retail investors. By sticking to diversified funds, you avoid the pitfalls of market timing and benefit from professional management across various sectors," said Kumar.

 

All this means is that if most of your money is invested in a general-purpose fund with a good track record, then the fund manager will appropriately emphasise Energy or Infrastructure or Technology stocks or whatever when it's the right time to do so. However, unlike a sectoral fund, they won't go overboard with that theme and stay within an overall diversification framework. So, when that sector goes out of favour, you won't be stuck with it, added Kumar.

 

"This balanced approach provides a crucial safeguard against sector-specific risks while still allowing your portfolio to benefit from sectoral outperformance. It's important to remember that today's high-flying sector could be tomorrow's underperformer. By relying on a skilled fund manager to navigate these shifts within a diversified fund, you're better positioned to achieve consistent and long-term growth without the stress of constantly second-guessing market trends," said Kumar.