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Suresh Krishnamurthy

INVESTORS in DSP ML Top 100 Equity fund can retain their units. The fund's performance since launch in February 2003 has been steady, though below that of many of its peers. But the lower relative performance may be because of its large cash position in the initial days. However, fresh investments need not be considered now. Investors can evaluate their performance over a longer time frame before increasing exposures to the fund.

DSP ML Top 100 Equity fund's mandate is to invest in the top 100 stocks by market capitalisation. The fund's strategy involves investing in a broader mix of stocks compared to DSP ML's Equity Fund, which focusses on the largest companies in India. The risks may, therefore, be higher. However, going forward, returns may be higher for funds such as DSP ML Top 100 Equity compared to funds that invest only in large-cap stocks.

Performance: In the past six months, DSP ML Top 100 has recorded returns of about 67 per cent. This is higher than the 62 per cent return generated by its benchmark, BSE 100. However, compared to funds such as HDFC Top 200 (a comparable fund), DSP ML Opportunity has generated better returns.

Portfolio allocation: The fund's net assets under management have shot up sharply since March 2003. Assets under management have gone up to Rs 73 crore at the end of September from Rs 21.6 crore at the end of March. This has had an impact on the invested position of the fund between March and July.

However, the cash position in the fund was relatively low at 3.4 per cent at the end of September 2003. The fund holds a diversified portfolio of stocks. It has 30 stocks, with the exposure of none crossing 7 per cent. The top 10 stocks account for 47.8 per cent of net assets. The exposure to specific industries too is diversified. The top five sectors account for 46.3 per cent of net assets.

Despite the mandate to invest in the top 100 stocks by market capitalisation, the fund was largely invested in frontline stocks.

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