Mutual Funds

DSPBR Opportunities: Hold

K. Venkatasubramanian | Updated on November 15, 2017

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Investors can retain the units of DSPBR Opportunities Fund, given its ability to deliver reasonable, though not spectacular, returns over the long term.

Since a few other ‘opportunities' funds have delivered better returns over the past three-four years, investors looking for new funds to invest may refrain from this scheme now. Existing investors may hold the fund. The fund is fully invested in equities and may quickly benefit from any turnaround in markets.

Performance

DSPBR Opportunities has outpaced its benchmark, Nifty, over three- and five-year periods, but has marginally lagged behind on a one-year basis.

Over a five-year period, it has delivered returns of 4.5 per cent compounded annually, which places it in the mid-quartile of its category.

This is higher than funds such as L&T Opportunities and Tata Equity Opportunities, but lower than the likes of Reliance Equity Opportunities and UTI Opportunities, which are among the best performing diversified funds.

DSPBR Opportunities holds as much as 75-80 per cent of its portfolio in large-cap stocks (greater than Rs 7,500 crore market capitalisation). The fund delivers superior returns during periods when the markets are on a roll, but does not contain downsides better than its benchmark during protracted corrections. The underperformance, though, is generally restricted to the extent of 2-4 percentage points.

In the past one year too, its large-cap focus has not spared it from the market volatility. It has fallen higher than the category average in the last one year. This may be due to staying fully invested in equities and also because of holding over a fifth of assets in the underperforming financial sector.





Portfolio and strategy



DSPBR Opportunities has traditionally been well-diversified, holding as many as 65 stocks in its portfolio.

But over the past one year, the fund has reduced the number of companies in the portfolio to around 53. This makes it more compact without compromising on its diversifying strategy.

The fund also ensures that the exposure to individual stocks is restricted to less than 5 per cent of the portfolio, thus reducing the risk profile.

DSPBR Opportunities benefited by investing in the right sectors early on in 2009. These include banks, software, pharmaceuticals and consumer non-durables, all of which had a strong run in the market rally of 2009-10.

Over the past one year, the fund seems to have taken a call on sectors based on valuations and prospects.

Telecom services and auto now figure prominently among the top few sectors held by the fund.

Exposure to pharmaceuticals and software has been somewhat trimmed as has been the case with consumer non-durables.

But with the steep fall in the prices of banking stocks, exposure to this sector has been increased.

What speaks in favour of the fund is its ability to identify the right sectors when the markets are on a strong wicket. This has been proved in several rallies in the past.

Published on January 07, 2012

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