Mutual Funds

DSP Equity Opportunities: Stable returns over the long run

Yoganand D | Updated on November 17, 2019 Published on November 17, 2019

Investors with five-year horizon can buy its units; fund invests in large- and mid-cap stocks

Over the past year, the key equity benchmark index, the Sensex, scaled new highs backed by large-cap stocks, while the mid-cap segment continued to underperform. Investors with a low-risk appetite looking for stable performance in the large- and mid-cap categories can buy units of DSP Equity Opportunities. The fund taps both large- and mid-cap segments well. It is benchmarked against the Nifty Large Midcap 250 TRI.

It has outperformed the benchmark over longer time-frames of five and 10 years by delivering 10.8 per cent and 12.3 per cent returns against its benchmark’s 9.8 per cent and 10 per cent, respectively. However, the fund underperformed the benchmark marginally over the last three-year period.

The deficit over the three-year frame is largely due to negative returns in 2018, but the fund bounced back well thereafterm and has gained 10 per cent year-to-day, weathering the current year’s broader market volatility. The scheme has outpaced the benchmark in the one-year time-frame. It has outperformed the large- and mid-cap category average across all time-frames, making it a reliable scheme.

Portfolio and strategy

DSP Equity Opportunities holds a well-diversified portfolio. It predominantly invests in large-cap stocks. It also takes exposure in mid-cap stocks to boost returns.

But over the last one year, the mid-cap indices delivered negative return of 0.15 per cent. However, the large-caps have shielded the scheme’s net asset value (NAV) well despite being choppy. This fund can be a proper addition to the portfolio of investors seeking stable market-beating returns over the long term. You can consider the SIP route to buy units to average costs as well as to ride out volatility.

 

 

 

 

 

The fund holds more than 55 stocks in its kitty over the past year and picks highly liquid stocks. Barring a few large-cap ones, its exposure to other individual stocks is less than 3 per cent. Interestingly, the fund always allocates more than 20 per cent in banks, while holdings in all other sectors account for around 8 per cent, which has paid off well as private sector banks such as HDFC Bank, ICICI Bank and Axis Bank have performed well and boosted portfolio returns over the past year.

Moreover, it has upped its stake in petroleum products over the past year — added Reliance Industries and HPCL that have yielded good returns. On the other hand, the fund has trimmed its exposure to the automobile and auto ancillary sectors, which continue to witness slowdown.

DSP Equity Opportunities holds over 59 per cent of its portfolio in large-caps and 37 per cent in mid-caps. This blend allows the fund to deliver stable returns while adapting itself to changing market trends. Investors with a long-term horizon of over five years looking for consistent market-beating returns can buy the units of this fund.

Published on November 17, 2019
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