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TATA Asset Management launches India's first ever tourism thematic fund

15 Jul 2024|
9 min read |
by ICICI Securities Team

Travel, tourism, and hospitality businesses will do well in India in the coming years, according to you? But you do not know which stocks to pick from this space? Until now, it was tough, but it will no longer be. Tata Asset Management, which is India’s 11th biggest Asset Management Company (AMC), has recently launched India's first domestic fund focused on the tourism theme.

About TATA Asset Management

Tata Asset Management Company is a part of the Tata Group. They are a prominent player in the Indian mutual fund industry. The AMC was established in 1997 and offers a diverse range of mutual fund schemes catering to various investment goals and risk appetites. These schemes encompass equity, debt, hybrid funds, and solution-oriented funds that target specific financial needs like retirement planning or child education.

Tata AMC is known for its focus on investment research, risk management, and a long-term investment philosophy. They emphasize a strong research team that analyzes companies and market trends to guide their investment decisions within the chosen funds. Additionally, Tata AMC prioritizes risk management strategies to mitigate potential losses within their funds. Their focus on long-term wealth creation resonates with investors seeking a sustainable approach to growing their capital.

Types of themes launched by TATA AMC

The AMC has different thematic funds, and in this section, we will look at them to let you know there are other thematic funds available with the same AMC. Here is the list:

Thematic Fund

Brief Overview

Tata Infrastructure

It invests primarily in the stocks of companies engaged in infrastructure-related activities or those expected to benefit from them.

Tata India Consumer

The fund invests in a basket of companies across various segments of the Indian consumer market, such as FMCG (Fast Moving Consumer Goods), discretionary goods, and consumer durables.

Tata Resources & Energy

It include companies involved in mining, oil & gas exploration, power generation, renewable energy, and other related sectors.

Tata Banking and Financial Services

The fund primarily invests in stocks of banks, insurance companies, non-banking financial institutions (NBFCs), and other financial service providers.

Tata India Pharma & HealthCare

Fund primarily invests in companies across the pharmaceutical and healthcare spectrum, including established players and promising new ventures.

Tata Digital India

It invests primarily in equity or equity-related instruments of companies in the Information Technology (IT) sector in India.

TATA's Tourism Themed Fund

Tata Nifty India Tourism Index Fund opened for subscription on 8 July 2024 and will stay open for investor subscription until 19 July 2024. Let us look at the fund details.

Fundamentals

Value

Maximum Number of Stocks

30

Maximum Capping Limit

20%

Current Stocks in the Index

17

Index Valuation (P/E)

58.42

The maximum number of stocks in the fund is capped at 30. As of 18 June 2024, the fund had 17 stocks, with the highest allocation towards Indian Hotels (20.73%).

The complete breakdown of stocks in the fund is as below:

No

Stock

Weightage (%)

1

Indian Hotels Co. Ltd.

20.73

2

InterGlobe Aviation Ltd.

19.21

3

Indian Railway Catering And Tourism Corporation Ltd.

13.61

4

GMR Airports Infrastructure Ltd.

10.5

5

Jubilant Foodworks Ltd.

9.15

6

EIH Ltd.

4.14

7

Lemon Tree Hotels Ltd.

3.08

8

Devyani International Ltd.

2.92

9

Sapphire Foods India Ltd.

2.85

10

Chalet Hotels Ltd.

2.48

11

Westlife Foodworld Ltd.

2.35

12

BLS International Services Ltd.

1.79

13

Safari Industries (India) Ltd.

1.77

14

Restaurant Brands Asia Ltd.

1.68

15

V.I.P. Industries Ltd.

1.37

16

Mahindra Holidays & Resorts India Ltd.

1.26

17

Easy Trip Planners Ltd.

1.1

In line with the investment allocation pattern of the scheme, the scheme will invest in:

  • Equity and equity-related instruments and/ or equity derivatives
  • Debt and money market instruments
  • Units of Domestic Mutual Funds

Investment Strategy of the Fund

The Fund is a passively managed Index fund that will employ an investment approach designed to track the performance of the Nifty India Tourism Index (TRI). The Scheme seeks to achieve this goal by investing in securities constituting the Index in the same proportion as in the Index. The Scheme will invest at least 95% of its total assets in the securities comprising the Underlying Index. The scheme may also invest in debt/money market instruments, including units of Mutual Funds to meet the liquidity and expense requirements.

Risks Associated with the Fund

Here are some of the risks associated with the fund:

  • Regulatory and Legal Risks: Hotels, Resorts, Restaurant space, Airplanes, etc. investments are subject to various regulations and zoning laws. Changes in regulations, zoning restrictions, or legal disputes can affect the development potential and value of the assets.
  • Market Saturation & Competition Risk: Investing in a market that is already saturated with similar types of leisure services can limit the potential for income or capital appreciation. i. Environmental and Natural Disaster Risks: Tourism-related assets & services are exposed to environmental risks, such as pollution or contamination. Additionally, Hotels, Resorts, Restaurant space, Airplanes, etc. in certain geographic areas may be prone to natural disasters like floods, earthquakes, or hurricanes, which can cause significant damage.
  • Technological Disruption: Changes in technology (rise of free home delivery and accessibility of virtual 360-degree tours of any location from any remote area) could help people save both time & cost. I can impact the demand for certain types of assets like Fine Dine-In Hotels & Restaurants, traveling to various destinations, exploring exotic locations, mode of traveling like flights, etc.

Should you invest?

Hopefully, the information shared will help you make that call. However, before leaving, we would say that first evaluate if you should invest in equity (ideal for the long term) and risk on the thematic fund. Tourism is one of the fastest-growing sectors in India. However, due to the risky nature of sectoral/thematic funds, only experienced investors with high-risk appetites should consider this.

Also, you should only consider this if you are optimistic about the long-term prospects of the Indian tourism industry. If so, this fund could be a good way to gain exposure to a basket of companies in this sector.

Before you go

The launch of a tourism-themed fund signifies a growing interest in thematic investing in India. If you seek exposure to the tourism sector's potential growth, you should carefully research the fund, understand its risk tolerance, and potentially consult a financial advisor before investing. 

Disclaimer: ICICI Securities Ltd.( I-Sec). Registered office of I-Sec is at ICICI Securities Ltd. - ICICI Centre, H. T. Parekh Marg, Churchgate, Mumbai - 400020, India, Tel No : 022 - 2288 2460, 022 - 2288 2470.  The contents herein above shall not be considered as an invitation or persuasion to trade or invest.  Investments in securities market are subject to market risks, read all the related documents carefully before investing. I-Sec and affiliates accept no liabilities for any loss or damage of any kind arising out of any actions taken in reliance thereon. The contents are solely for informational and educational purpose.

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