DSP Blackrock Equity Fund: Invest

Investors can buy the units of DSPBR Equity Fund, considering the fund’s track record in delivering strong returns and its ability to contain downsides quite well during periods of market volatility.

DSPBR Equity invests in stocks across market capitalisation segments — large, mid and small — taking advantage of any particular momentum in the market.

The fund has beaten its benchmark, the Nifty, consistently over a one-, three- and five- year period. Over a five-year period, the fund has delivered a compounded annual return of nearly 21 per cent that places it among the top few funds in the diversified category.

DSPBR Equity may be held as part of the core portfolio of investors, who look to outperform the benchmark during market upswings and protection from heavy downsides during bear markets.

Performance and strategy: The fund has been in existence for nearly 12 years. During the market upswings in 2003, 2005 and 2007, the fund outperformed its benchmark by a huge margin.

Considering DSPBR Equity’s flexi-cap approach, if one were to compare it against the CNX 500 as a benchmark, the former has demonstrated superior performance, a feat not easy to achieve.

During periods of market volatility, especially prolonged ones such as the one in 2004, or the whole of 2008, the fund has managed to protect the fall in its NAV better than its benchmark.

Its track record on short volatile periods is mixed; while it contained downsides in 2007, the same was not possible in 2006.

For investors looking at longer timeframes of at least 3-5 years, either the lump-sum or the systematic investment route may be options, depending on their surplus.

DSPBR Equity has a higher allocation to mid-cap stocks (less than Rs 5,000 crore market capitalisation) compared to funds such as Birla Sun Life Equity and HDFC Growth. The fund now has over 25 per cent of the portfolio invested in such stocks.

During the bull-run of 2003-07, the mid-cap allocation was over 35 per cent, which was one of the reasons for the fund’s good performance as mid-caps made bountiful gains during this period.

A large-cap intensive approach may be desirable in the present environment, as these stocks may be the first to recover when the current market volatility ends. The cash/debt component in the portfolio has been consistently little over 10 per cent , which suggests that the fund prefers to remain invested in equities albeit with large diversity rather than sit on cash and wait for opportunities.

Portfolio: The number of stocks in the portfolio has been trimmed over the last one year. From over 80 stocks over a year ago, the number of stocks in the portfolio in February 2009 is 67.

The diversification in terms of sectors invested is quite high, with as many as 26 of them in the portfolio. Further the fund appears to have adopted a defensive approach in recent times with consumer non-durables, pharmaceuticals and software being among the top few sectors held. - Hindu Business Line.

The fund is managed by Mr Apoorva Shah.

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Mutual Fund idea - HSBC Dynamic

Investors can consider adding the HSBC Dynamic Fund to their portfolio. Though the fund is relatively new , it has done well to contain its downside in turbulent markets. Not only has it significantly outpaced its benchmark, the BSE 200 but it has also bettered its returns over some of the well-established large-cap funds such as Kotak 30 and Sundaram BNP Paribas Select Focus. While a good part of this outperformance can be credited to the fund’s high debt exposure, the fund’s mandate allows it to even switch completely to debt: investors should note that the high debt could limit returns when the markets look up again. On that note, the fund’s flexibility in switching to and from equity to debt also gives it a significant edge over balanced funds. This also spares investors from incurring entry and exit loads if they were to dynamically switch between equity and debt funds themselves.

Performance

In the last one year, HSBC Dynamic’s NAV has fallen by over 43 per cent, while that of its benchmark, the BSE 200, declined by over 53 per cent. The fund’s mandate that allows making tactical asset allocation calls appears to have come to its rescue. While that does make the fund reliant on the fund manager’s ability to get dynamic asset allocation calls right, it has acquitted itself well in this respect.

As early as June 2008, the fund had increased its debt exposure to 31.5 per cent. Such a high exposure to debt would have helped it pre-empt the impact of the equity fall that followed in October. Having the ability to make such dynamic asset allocation calls may also help the fund deliver returns better that that of balanced funds, which have a fixed asset allocation strategy (65-35 equity-debt). Its one-year returns lag that of balanced funds such as HDFC Prudence only marginally.

So, while the debt exposure will help the fund score over pure equity funds in the markets such as these, it may lag their returns if and when the markets turn around. In the brief four-month stint that fund had in the bull market, during September 2007-January 2008, the fund just about managed to keep pace with its benchmark.

Portfolio

In the equity portion of the fund’s portfolio, which makes up for 74 per cent of its total assets, it is the large cap stocks that find greater prominence, making up for about 54 per cent of the assets.

Mid and small-cap stocks contribute to over 10 per cent and 9 per cent, respectively. In terms of sector allocation, the fund has the highest presence in consumer non-durables, followed by that in banks and pharmaceuticals. With respect to its debt allocation, while the overall exposure to debt has moderated in recent months, it still is significant, at about 15 per cent.

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Mutual Funds Idea - DSP ML World Gold Fund.

Mutual Funds Idea - DSP ML World Gold Fund: -
Current NAV: - 13.19 Rs.
Min Investment: - 5000 Rs.
Total Assets: - 2062.44 ( June 30, 2008 )

Summary: -
This is an open ended growth scheme. Launched last September . The fund has never sliped below 10 Rs at which the company gave to the public. Its all time low is 11.50 and all time high is 16.30.
This fund basically invests in gold mining companies. Its an open-ended fund of funds scheme, investing in gold mining companies through an international fund, with the primary objective of seeking capital appreciation by investing predominantly in units of Merrill Lynch International Investment Funds – World Gold Fund (MLIIF –WGF).
Objective: -
The primary investment objective of the Scheme is to seek capital appreciation by investing predominantly in units of MLIIF - WGF. The Scheme may, at the discretion of the Investment Manager, also invest in the units of other similar overseas mutual fund schemes, which may constitute a significant part of its corpus. The Scheme may also invest a certain portion of its corpus in money market securities and/or units of money market/liquid schemes of DSP Merrill Lynch Mutual Fund, in order to meet liquidity requirements from time to time.
Why to invest ?
Gold prices are rising at a never stopping rate. Currently gold is giving a side ways movement. A much uptrend is left to be seen in gold. Gold is currently trading range bounded within 12200 - 13250 Rs.
Portfolio: -

Top 10 Sectors		Top 10 Stocks
Industry	% to Net Assets	Name of Instrument	% to Net Assets
Gold	76.70%	Newcrest Mining	7.90%
Platinum	11.30%	Barrick Gold	6.90%
Silver/ Gold	8.90%	Kinross Gold	6.60%
Cash	2.30%	Impala	5.50%
Diamonds	0.80%	Minas Buenaventura	5.40%
		INDS Penoles	4.10%
		Goldcorp	5.40%
		Lihir Gold	4.60%
		Agnico Eagle Mines	4.00%
		Newmont Mining	4.00%

Verdict: -Buy.
Ratings: -3.5/5

Want to buy this fund through us mail us at contact@indianmoneyplus.com
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