The Hindu Business Line : DSPML Top 100 Equity Fund: Invest

In a highly volatile market, with an uncertain short-term outlook, large-cap stocks offer a relative safe haven for investors. The large-cap oriented DSPML Top 100 Equity Fund is a good investment option on this score. The fund has generated an annualised return of 31 per cent and 40 per cent over three- and five-year periods and outpaced its benchmark BSE-100 by a good margin.

As the name implies, the fund invests in the top 100 listed companies by market capitalisation. Since the fund invests predominantly in large-cap stocks, even if these stocks melt down along with the market during a sweeping correction, the fund has the potential to bounce back quickly in the event of a market recovery.

On a rolling return basis, this fund has outpaced its benchmark about 70 per cent of the time over the past 24 months- a very volatile period for stocks. It appears to be suitable for conservative investors willing to take moderate levels of risk to outpace the index.

Performance: The NAV has grown by 5 per cent over the past year (as on June 27) and the fund has outpaced the BSE-100. During this period, it has trailed HSBC Equity Fund — a large-cap oriented fund. Though the benchmark has shed 41 per cent in value so far in 2008, DSPML Top 100 has contained losses at 34 per cent. The fund appears to have contained its losses by reducing weights substantially to banking and capital goods stocks.

Portfolio Overview: This fund’s mandate allows it to hold cash, amounting to up to ten per cent of its assets.

The May portfolio shows that the fund had a significant exposure to both debt and derivatives, which has probably helped in volatile markets.

Though the total asset base increased by 125 per cent to Rs 900 crore in the past year, the fund has restricted the number of stocks in the portfolio to 38. In the past six months, the weight of banking and capital goods has come down from 27 per cent to just 3 per cent.

The fund stepped up exposure to software, petroleum and telecom, which has probably helped performance.

The three preferred sectors accounted for 26 per cent of the assets. Though most of the stocks are drawn from the BSE-100 index, Neyvile Lignite Corporation and Sun TV Network are exceptions. The fund is managed by Mr Apoorva Shah.

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