The Hindu Business Line : DSP-ML Equity Fund: Invest

An investment can be considered in DSP-ML Equity Fund, which has notched up a good track record over three-year and five-year periods. The fund has also been among the top performers the past year.

Investing in a blend of large-cap and mid-cap stocks, the fund is suitable for those with a moderate risk profile. As there are other funds with a superior track record over a five-year period, this fund need not be a core holding in your portfolio yet.

DSPML Equity can, however, be considered by those who wish to increase their exposure to mid-cap stocks. Currently there are few mid-cap funds with track records across market cycles. In this context, investors may wish to consider funds such as DSPML Equity, which appears to follow a flexi-cap strategy.

Performance: DSPML Equity has delivered a return of 15 per cent over the past year, marginally underperforming, the Nifty's return of 16 per cent.

Given its significant allocation to mid-cap stocks, the fund fares better against broader indices such as the S&P CNX 500. Sister fund DSPML Top 100 Equity, which has a large-cap focus, has only done marginally better with a return of 17 per cent.

The fund has compensated for the higher risk it has taken through its exposure to mid-cap stocks. DSPML Equity has been a fairly consistent performer. A five-year track record now excludes the bear markets of 2000 and 2001, which places funds in a favourable light.

However, DSPML Equity, whose performance picked up in 2002, has shown more resilience in the intermittent corrections that have occurred in the four-year bull phase.

The fund has outperformed a broad-based index such as the BSE-200 in 25 of the last 36 months, or 70 per cent of the time. In seven of the 12 months that the index shed value during this period, DSP-ML Equity declined less than the index.

In the recent correction in May-June 2006, the fund did take a knock in performance, as did most other equity funds. However, the extent of underperformance vis-à-vis the index was not too significant.

Portfolio overview: DSPML Equity has a well-diversified portfolio of about 70 stocks, with the top ten holdings accounting for about 30 per cent of its Rs 650-crore asset base. Software accounts for close to 20 per cent of the portfolio. Software, capital goods and banking are its top three sectors.

The fund currently has about 45 per cent of its assets invested in mid-cap and small-cap stocks, or stocks that have a market capitalisation of less than Rs 5,000 crore.

The exposure to mid-caps appears to have gradually increased from 35 per cent in June. NIIT, Apollo Tyres, Bharat Forge and Marico are some of the stocks that form its top ten holdings, which are otherwise dominated by index heavyweights.

Fund facts: DSP-ML Equity was launched in April 1997. The minimum investment amount is Rs 5,000 for a lumpsum investment.

Dividend and dividend re-investment options are available. The fund manager is Mr Apoorva Shah.

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