Tata Mutual doesn’t see any reason to tinker much with its Shariah compliant Tata Ethical Fund, which continues to be operated as an open-ended investment scheme since its inception date of the 24th May 1996.
Fund manager Abhinav H Sharma told IFN Investor this fund has maintained its operational stance as the system is working fine, with monthly input from its current Shariah advisors TASIS (Taqwaa Advisory and Shariah Investment Solutions).
“They give us the list of stocks from which we can buy. And then as a fund manager, I choose whatever best I think can do well. The Shariah compliance part is with them and the fund management part is with us. That’s how it has been going on for so many years.”
While this fund is benchmarked against the Nifty 500 Shariah index, where its constituents vary and stood at 238 securities as at 31st July 2024. Abhinav said the TASIS list considers the entire market and has over 1,000 Shariah compliant securities that the Tata Ethical Fund may invest in.
Even so, not all the equities in the TASIS list would be considered for various reasons like having too low a market capitalization. Also, while there may be overlaps between the TASIS list and the Nifty 500 Shariah stocks that the Tata Ethical Fund would invest in, the weightages would be different.
Being the latest fund manager, since September 2021, Abhinav said the investment strategy using the TASIS list has seen the fund value roughly triple during his watch – standing at INR30.93 trillion (US$3.69 billion) as at 31st July 2024.
Attributing this growth to be an indicator of how well the overall Indian economy has been doing in recent years, Abhinav is confident of this trend continuing as the “macro outlook for India remains very, very positive at this point of time”.
Citing four main aspects which are driving India’s economic potential, Abhinav noted that information technology services and the pharmaceutical sectors had resulted in India having some of the world’s largest companies.
The other two factors for India are its relatively young population and middle-class income group still at the nascent stage. Abhinav said these two would be major economic and investment drivers, which the Tata Ethical Fund is poised to tap as it is open-ended with no maximum cap.
Abhinav added that the fund’s investor base includes many non-Muslims as they seem to like how Shariah compliance helps weed out equities of potentially higher risk firms with huge debts.
