Tata Small Cap Fund Direct Payout of Inc Dist cum Cap Wdrl INF277K013O7

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

The most important driver of the rating is the fund's excellent long-term risk-adjusted performance. This can be seen in its five-year alpha calculated relative to the category index, which suggests that the managers have shown skill in their allocation of risk. The parent firm's five-year risk-adjusted success ratio of 50% also strengthens the process. The measure indicates the percentage of a firm's funds that have beat their respective category's median return for the period. Their relatively high success ratio suggests that the firm does well for investors and that this fund may benefit from that. However, the process is limited by its parent firm's inferior 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 leans toward smaller, deeper value companies compared with its average peer in the Small-Cap Morningstar Category. Looking at 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. In the latest month, the strategy was also less exposed to the Liquidity factor compared with Morningstar Category peers. This strategy has also had more exposure to high-momentum stocks in recent years. Momentum is based on the premise that market outperformers will continue to outperform, and laggards will continue to lag. This means that managers are overweighting stocks currently on a winning streak. Compared with category peers, the strategy also had more exposure to the Momentum factor in the most recent month. Additionally, this strategy's portfolio has held more stocks with high dividend or buyback yields than peers over recent years. Stocks with high yields can be more stable, mature companies, but at times extreme market pressure or fundamental deterioration may prompt them to cut their dividends, which tends to hurt 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 7.3 and 3.9 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 6.2 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, 33.9% are concentrated within the top 10 holdings, as opposed to the category’s 17.1% average.