The Hindu Business Line : DSPBR India T.I.G.E.R: Hold

Investors can hold on to their units in DSPBR India T.I.G.E.R (The Infrastructure Growth and Economic Reforms) Fund considering its track record since inception. The fund has comfortably outpaced its benchmark and the category average over a one-, three- and five-year time frame.

However, given its burgeoning asset size and more diversified exposure, the fund’s ability to offer superior returns that is typically expected of a theme fund may be capped. Investors can consider adding units in the event of a broad market correction. Fresh exposures may be avoided for now.

Over a five-year period, the fund has generated compounded annualised return of 30 per cent and outpaced the benchmark BSE 100 by a good six percentage points. Note that theme funds require well-timed entry and exits. To this extent, the fund would require active tracking and may not be suitable for risk-averse investors.While T.I.G.E.R is mandated to be a theme-based fund, the stocks in the portfolio provide a more diversified picture.

Large caps accounted for a major chunk of the portfolio while one-fifth of the assets were invested in mid and small-cap stocks (with market capitalisation less than Rs 7,500 crore).

While the diversified portfolio to some extent reduces the risk attached to theme funds, it may also cap the potential for returns that can arise from taking focussed bets in different segments of infrastructure.

Performance: The fund’s return over the past one year is negative 1.4 per cent even as its benchmark BSE 100 and category average lost 3 per cent each.

The fund trailed its benchmark over a shorter period of three and six months, as a result of the cash position in its portfolio till the month of May. To this extent, it may have lost out on returns, especially in the infrastructure space.

The fund’s performance has been consistent over a three-year period and it has outpaced its benchmark in 25 out of the 36 months on a rolling returns basis.

The fund underwent bad patches in the early part of 2008 due to higher weights in capital goods and construction stocks which declined rapidly; over the subsequent months it pruned weights in both sectors. The fund also takes leveraged exposure to derivatives in stocks and S&P CNX Nifty future.

At a time when cement and construction stocks were being viewed favourably in the recent market rally, the fund chose to prune its exposure to few stocks of these sectors.

Portfolio overview: The fund has a well diversified portfolio of 71 stocks. Exposure to individual stocks was restricted to less than 7 per cent of the assets.

The top 10 stocks accounted for 29 per cent of the portfolio. The assets were spread across 22 sectors although weights to many sectors were hardly 1 per cent.

The fund in the past couple of months reduced the cash holding by adding 14 stocks afresh to the portfolio. Suzlon Energy, Grasim Industries, IDBI Bank and SAIL were some of the prominent stocks added afresh just ahead of the rally and these stocks paid rich returns.

Fund facts: The fund was launched in April 2005 and is managed by Mr Anup Maheswari.

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