DSPBR Equity: INVEST

Investors looking for a relatively less risky multi-cap fund can buy the units of DSPBR Equity. The fund may not be a superlative performer, but has delivered steady returns over a long term of 5-7 years.

Due to its rather dispersed investment strategy of investing across market capitalisation and in an inordinately large number of stocks, DSPBR Equity may be a good diversifier to an investor’s portfolio. While over a one-year time frame, it has managed to more or less match its benchmark – CNX 500, the fund has outscored over three- and five-year periods.

In the last five years, the fund has delivered compounded annual returns of 7.3 per cent, which is higher than Reliance Growth, HSBC Equity and Fidelity Equity.

This performance puts it in the mid quartile of funds in its category.

DSPBR Equity has delivered reasonable returns during market rallies and also contained downsides during market falls.

Investors with a moderate risk appetite and looking for steady returns can take exposure to the fund through the SIP (systematic investment plan) route and park small sums there. Given the volatile nature of the markets currently, lumpsums can be avoided.

Portfolio and strategy

DSPBR Equity takes a multi-cap approach and invests a good portion of its portfolio in mid-cap (less than Rs 7,500 crore market capitalisation) stocks.

The proportion invested in such stocks has been to the tune of 35-40 per cent of the portfolio.

Although this may make the fund appear to be a risky bet, it tempers this exposure by taking a considerably diluted approach to individual stocks.

The number of stocks in DSPBR Equity’s portfolio has ranged from 70 to as much as 80. This means that the fund takes a completely non-concentrated exposure.

The fund has consistently had top exposure to banking sector. Its other top holdings are in software and automobiles, which gives the fund a blend of value and defensiveness. Over the last one year, the fund has trimmed exposure to sectors such as capital goods and consumer non-durables.

Interestingly, petroleum products is another of its key holdings where the company has hiked stakes. This may be in anticipation of diesel price de-regulation, which could provide significant upside for stocks in this segment.

Even with sectors, exposure to individual segments is limited to less than 10 per cent barring a couple of cases.

DSPBR Equity had a rough ride in 2010 and 2011, but is back in the reckoning this year, outperforming its benchmark and category average handsomely.

The fund (dividend option) has a track record of over 15 years. Well diversified across stocks and sectors, the fund is designed to ride out volatility in the markets and deliver steady returns across market cycles.

The NAV per unit of the growth option is Rs 15.4.

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