The Hindu Business Line : DWS Investment Opportunity Fund: Invest

Investments can be considered in DWS Investment Opportunity Fund based on the fund’s three-year record. The fund’s compounded annualised return of 29 per cent places it comfortably ahead of its benchmark BSE 200 as well as the category average. The fund cannot, however, form part of a core portfolio given its aggressive style and limited track record. The fund has positioned itself as an aggressively managed diversified multi-cap scheme. Flexi cap funds are seen as having an edge over dedicated large or midcap funds given their flexibility to move assets dynamically based on the market condition.

However, in practice, funds such as HDFC Premier Multicap and Magnum Multicap have so far failed to take advantage of the mandate and have trailed their diversified peers over a one and three-year period. However, the small asset base of DWS has helped it to tactfully churn its portfolio based on market conditions.

In the past year, the asset size of several funds has shrunk either due to correction in the stock prices or redemption by investors. But DWS Investment Opportunity Fund’s asset size has surged from Rs 13 crore to Rs 147 crore.

Suitability: The compact size of assets allows the fund to move them dynamically and aggressively. The fund’s risk profile is similar to other diversified funds. Since the fund has seen a sudden surge in investor interest, its ability to manage the expanding assets has to be watched. However, its performance over the past four years reassures that the fund is a good diversifier.

Performance: The fund managed a one-year return of a negative 13.7 per cent in comparison to 2.0 per cent posted by its benchmark. Despite holding close to 70 per cent of assets in large cap stocks during the recent pullback, it just managed to beat the category average. The fund may have missed out on the narrow rally, which saw a number of mid- and small-cap gainers. On a rolling return basis over the past three years, the fund outpaced its benchmark a good 65 per cent of the times, reflecting consistency.

Portfolio overview: The fund held 36 stocks in the recent portfolio and restricted stock-specific exposure to less than 6 per cent of the assets. It actively churned banking stocks over the past six months, with ICICI Bank and State Bank of India paving the way for HDFC Bank.

As a defensive bet the fund had higher exposure to sectors such as consumer non-durables and petroleum. The fund was launched in January 2004 and is managed by Mr Aniket Inamdar.

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