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Investors looking for a steady performer over the long term can buy the units of DSPBR Opportunities.
The fund underperformed a tad in 2010-11, but from early 2012, the scheme has witnessed a significant revival in performance.
Over one-, three- and five-year timeframes, DSPBR Opportunities has outpaced the returns of its benchmark – CNX 500.
The level of outperformance has been to the tune of 2-6 percentage points over the years.
In the last five years, DSPBR Opportunities has delivered compounded annual returns of 10.7 per cent placing it in the mid-quartile of diversified equity funds in terms of performance.
While the fund manages to outperform during periods when the markets rally, it falls a little bit more than its category or standard indices, though by not more than 1-2 percentage points. The fund maintains a highly diversified portfolio without taking any large concentrated bets on individual stocks, reducing the overall risk.
By mostly latching onto the right sectors, the fund has managed to ride out the rallies in many segments quite well.
Investors with a moderate risk appetite can take exposure to DSPBR Opportunities as a suitable diversifier for their portfolio. Investments can also be routed through the SIP (systematic investment plan) mode to ride out market volatility.
Portfolio and strategy
DSPBR Opportunities invests around 75 per cent of its portfolio in large-cap stocks (more than Rs 7,500 crore market capitalisation), with the rest invested in mid-cap stocks for enhancing returns. Though it is not a top notch performer, it has done better than peers such as Kotak Opportunities.
By investing in over 75 stocks, the fund significantly reduces the risk associated with market volatility and rarely does exposure to individual stocks exceed 5 per cent. Although the large number of stocks creates a somewhat scattered portfolio, the fund has generally chosen the right picks to aid outperformance.
The sectors where the fund has top exposure are generally banks and financial services, software, consumer non-durables and pharma, with the weightage to individual segments altered according to market conditions.
These sectors have outperformed markets in turn over the past few years. With significant exposure to defensive segments, the fund is likely to ride out market volatility quite well.
Within the sector choices, DSPBR Opportunities has chosen stocks that enjoyed a fair degree of outperformance. United Spirits, TCS, IndusInd Bank and HDFC are examples of key outperformers within those sectors.
Overall, the fund could deliver well over the long-term of 5-7 years. Invest in it if you are looking for above-average rather than spectacular returns.
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