The Hindu Business Line : DSP Merrill Lynch Opportunities: Invest

Exposures may be considered in DSP Merrill Lynch Opportunities Fund, as it continues to perform impressively. The portfolio tilt, with a bias towards large-cap stocks and sectors such as IT, banking and engineering, may prove rewarding at this stage of the bull market.

The fund appears well-placed to handle any protracted period of sluggish trends in equity prices without missing out much on the price action now underway.

The performance over the past year has been good with the NAV showing gains of about 65 per cent. It has consistently outpaced benchmark indices as well as most diversified funds. This is especially true over a longer period of three- to-five years. With its ability to handle different phases of the market and deliver attractive returns, DSP Merrill Lynch Opportunities is one of the superior options in the diversified funds space.

Investors could make use of a six-month systematic investment plan to take exposures. This will ensure that they do not lock in large sums at one go now and also enable them to take advantage of any weakness in the broad market.

Suitability: The fund's risk profile is in line with what one would expect for a diversified fund. It has delivered returns that have more than attractively compensated for the risk element. Given its track record, we retain our view this should be one of the preferred choices for a portfolio of funds. Investors could opt for the dividend re-investment option.

Portfolio overview: The fund now has a greater tilt towards large-cap stocks than was the case six months or a year ago. This shift has worked in the fund's favour, as large-cap stocks have been at the forefront of the rally over the past few months. Mid-cap stocks account for less than 30 per cent of assets.

A few prominent and interesting mid-cap exposures are Deccan Chronicle, Marksans Pharma, Graphite India, Karur Vysya Bank and NRB Bearings.

In the large-cap space, the fund has stepped up allocation to stocks such as Grasim, Crompton Greaves, Larsen & Toubro and Hindustan Lever, which now figure in the top ten holdings.

There has been a steady rise in the asset base over the past twelve months. It now has about Rs 925 crore in management.

This size is likely to provide for a relatively high degree of flexibility in fund management, which is also a positive factor.

Fund facts: DSP Merill Lynch Opportunities was launched in May 2000. The minimum investment is Rs 5,000. The entry load is 2.25 per cent of NAV. There is no exit load. The fund manager is Mr S. Naganath.

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