DSPBR Focus 25: Buy

DSP BlackRock Focus 25 fund is an equity-oriented large-cap fund that has completed five years in the Indian market.

The fund has had a reasonable track record during this period; recently, its performance has shown an improvement.

The scheme has a mandate of investing predominantly in large-cap stocks, companies which are among the top 200 listed stocks by market capitalisation.

It also limits its exposure to the extent of 20 per cent of net assets to companies below the top 200 by market capitalisation.

Take the SIP route As the name indicates, the fund runs a compact portfolio which focuses on up to 25 companies that it believes have the potential to outperform its benchmark — BSE 200. Previously, the fund’s performance was benchmarked against the BSE Sensex.

The fund doesn’t take cash calls and stays invested to the extent of 95 per cent, excluding debt exposure which it takes for managing its liquidity requirements. Investors can take exposure in the large-cap fund through the systematic investment plan (SIP) route. Considering the current market volatility, lumpsum exposure can be avoided.

DSPBR Focus 25 has outperformed its benchmarks by huge margins over one to three years.

However, in the last five years, the fund’s return of 9.3 per cent is slightly below the category average return of 9.7 per cent.

Though the fund had difficulty in surpassing the benchmark return during the years 2011, 2012 and 2013, it picked up pace from 2014 when it delivered a 50 per cent return against the benchmark return of 35 per cent.

The fund restricts itself to 25 stocks with 95 per cent of the assets going into these holdings.

Well-timed entry Banks, automobiles and IT are now the preferred sectors which together make up 55 per cent of the allocation. Interestingly, the fund has stuck to the same group of sectors since late 2014, while the allocation varied.

In the past one year, the fund has exited the underperforming fertiliser and construction sectors.

On the other hand, textile products and gas supply companies have entered the portfolio.

The fund combines momentum bets with buy and hold positions. For instance, Maruti Suzuki and HDFC Bank, which are currently the top two holdings for the fund, have been in the portfolio since January 2014.

The fund has well-timed its entry and both the stocks have yielded excellent returns so far. Infosys entered the portfolio in July and has since delivered good short-term returns. Ashok Leyland, Reliance Industries, Adani Ports and SRF were the other stocks included in the past four months.

Meanwhile, stocks such as Coromandel International, Gateway Distriparks and Bajaj Finserv have moved out.

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