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DSP ML T.I.G.E.R Fund: Invest

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Suresh Parthasarathy

Investments can be considered in DSPML T.I.G.E.R (The Infrastructure Growth and Economic Reforms) Fund; the fund has a good track record relative to the market and its peers over the past three years.

It has generated an annualised return of 51 per cent since inception and has outpaced its benchmark, the BSE 100, by 12 percentage points during the same period.

DSPML T.I.G.E.R. Fund seeks to invest in stocks of companies that would benefit from economic reforms and infrastructure development and was among the first funds to piggyback on this theme.

In general, theme-based funds carry a higher risk profile than their diversified counterparts. Since the universe for investment is restricted to select sectors, the fortunes in these areas can have a big impact on the fund's returns. Hence, theme-based funds are more suitable for the informed investor who can track the performance of specific sectors.

However, the T.I.G.E.R Fund has a relatively diversified portfolio and thus carries a moderate risk profile. Investors also have to keep in mind that infrastructure theme funds usually have an exposure of 30-40 per cent to mid-cap stocks (market capitalisation less than Rs 5,000 crore), leading to a higher risk profile. Concentrated bets on sectors such as capital goods also add to the fund's risk level. Hence, risk-averse investors may find diversified funds a better alternative.

Performance

: DSPML T.I.G.E.R's. NAV has grown 18 per cent for the past year and outpaced its benchmark BSE-100 by 3 percentage points but trailed the ICICI Pru Infrastructure Fund. In the same period, it outperformed peers such as Tata Infrastructure and Birla Infrastructure Fund. The fund's performance has, however, been relatively consistent, trailing the benchmark in just seven of the past 24 months on a monthly return basis. Though impacted by the mid-cap meltdown in May, it staged a recovery subsequently.

Profile

: The fund has a well-diversified portfolio, consisting of about 61 stocks. Capital goods stocks, on an average, accounted for 23 per cent of the portfolio the past year and the top three sectors cornered 40 per cent of the assets. The fund reduced exposure to the cement sector earlier this year, pruning holdings from 13 per cent to 4.5 per cent. This strategy helped it contain losses during the post-Budget correction.

Fund facts

: Mr Soumendra Nath Lahiri manages the fund, which was launched in June 2004.

(This article was published in the Business Line print edition dated April 22, 2007)
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