The Hindu Business Line : DSPML Equity: Invest

With a strong long-term track record, a well-diversified investment strategy and a portfolio that carries a blend of large-cap and mid-cap stocks, DSPML Equity is a good option for investors with a moderate risk profile. The fund figures in the upper quartile of fund rankings over a one-year period. It ranks among the top ten funds over a five-year period. Investments can be planned in phases or via Systematic Investment Plans to minimise the impact of poor market timing.

While its sister fund DSPML Top 100 Equity restricts its investments to large-cap stocks DSPML Equity has a profile that is typical of diversified equity funds.

It invests about 60-70 per cent of its assets in large-caps and the balance in mid-cap stocks. The assets of close to Rs 1200 crore are invested in as many as 70 stocks. This is an offshoot of its strategy to restrict exposures in each stock to about 5 per cent. It also avoids taking concentrated bets in sectors.

Performance: Over the last five years, DSPML Equity’s monthly average return has outpaced that of its benchmark the Nifty 75 per cent of the time.

The fund has delivered a return of more than 60 per cent over the past year, beating the category average by more than 10 percentage points.

The performance is impressive considering its less risky portfolio profile. Most diversified funds that have topped the charts recently have been either concentrated in their sectors or take larger stakes in select stocks.

DSPML Equity Fund, therefore, scores high on a risk-adjusted basis.

The rally over the past year has been extremely selective and more so in the last six months. Only 40 per cent of the funds have managed to beat the Nifty over the past year, as most of stocks have underperformed the index. The fact that the fund has outpaced the markets despite following a diversified approach also points to good stock selection overall.

Portfolio overview: Banking, energy and capital goods stocks account for about 40 per cent of the portfolio. While the usual picks figure among the large-cap holdings, its mid-cap picks are more offbeat.

The portfolio, for instance, sports stocks from fertilisers, chemicals and agro-commodities space such as Bayer Crop Science, Tata Chemicals, Coromandel Fertilisers and Advanta India, to name a few.

There is an element of value-based buying in its stock selection. While value picks have underperformed for the most part of the bull rally, this strategy could pay off in the long term.

Fund facts: DSPML Equity was launched in April 1997. Its latest NAV for its growth option is Rs 13.85.

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