Investors can buy units of DSP BR Top 100 Equity. It qualifies for the core of an equity portfolio on account of its steady performance across market cycles.

Over three and five-year periods, the fund has consistently performed better than its benchmark BSE 100. It delivered compounded annualised return of 22 per cent and 11.4 per cent over three and five-year periods.

During these periods, it outperformed its benchmark by 4-6 percentage points, respectively.

Of course, like any other equity scheme, there have been short periods of blips. But long-term holding evens this out.

DSP BR 100 is an all-weather fund because it has equally done a good job of bettering its benchmark performance during market declines.

In the 2008 meltdown, the fund lost 45 per cent and bettered its benchmark by nine percentage points. Besides, in 2011, it did far better than the BSE 100, which lost 9-15 per cent during the various dips in 2011.

The fund managed to achieve this feat by predominantly taking exposure to stocks with very-large market capitalisation. The average market capitalisation of its portfolio is far ahead of its peers such as Franklin India Bluechip and Birla Sun Life Frontline Equity.

Such holding is likely to ensure adequate participation in sustained rallies while protecting downside. Hence the fund would be an ideal option for a core portfolio.

Performance

In the past one year, when the large cap indices Sensex and Nifty fell in double digits, the fund managed the volatility well and shed just three percentage points.

Surprisingly, despite holding large-cap stocks in the portfolio, the fund aggressively churned it last year to ensure that it held a less volatile portfolio. This could have helped it contain losses.

Besides, the fund was able to attract inflows at a time when the industry was struggling to maintain existing assets. Such fresh inflows could also have helped the fund to buy stocks at lower level and further aided performance. But the fund's strategy of churning was not helpful in 2010 as it underperformed its peers.

Since the volatility of the fund is low, systematic investment returns are lower compared with lump-sum investment across three- and five year periods. That said, SIPs may be a superior option to help avoid any impact of market falls.

Portfolio overview

The fund has not taken concentrated exposure to sectors, barring banking. It has less than 10 per cent allocated to other sectors. The diversification can help the fund to reduce risk of the portfolio. In its March portfolio, the fund held 32 stocks and the top ten accounted for 52 per cent of the assets. The top three sectors in terms of assets allocation were banks, petroleum and software.

DSP BR Top 100 also churns stocks aggressively. On an average, 5-6 stocks are replaced in the portfolio every month. Going by the churn, it appears that the fund buys stocks with a target.

Exposure to the FMCG sector, which was the top performer last year, swung in the 1-9.5 per cent range. With pharma stocks losing steam, it reduced exposure to the sector.

The fund holds 15-20 per cent of the assets in cash and takes exposure to derivative futures in Nifty almost equal to its cash position.

The fund is managed by Mr Apoorva Shah.

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