DSP Black Rock Equity has proved to be an impressive long term performer with its sound portfolio management strategy
LAUNCHED in 1997, DSP Black Rock Equity is one of the oldest schemes in the DSPBR basket. The rise in its asset base and the popularity of this fund is an outcome of the fund's exceptional strategy and impressive performance over the years. Its asset base has grown four-fold to 2,130 crore since 2006.
PERFORMANCE:
Given its presence in the mutual fund industry for over a decade now, DSPBR equity fund has performed well in both bullish and bearish phases. The fund's track record over 13 years appears impressive when compared with the benchmark and other major market indices. The fund featured in the GOLD category for three consecutive quarters
It did underperform during the dotcom bubble of 2000-01 but managed to stage a quick recovery subsequently. In 2003, it posted a return of 130% compared to gains of 72% in the benchmark- S&P Nifty. Since then there has been no looking back for this fund. It has been consistently outperforming its benchmark as well as major market indices such as the Sensex and BSE 500. This fund has clocked a return of close to 50% over the past three years. If you had invested 1,000 in this scheme about three years ago in October 2007, that would be worth 1,500 today. These returns have been far more superior to those of the Sensex and the Nifty, whose gains were 17% and 20%, respectively during this period.
PORTFOLIO:
DSPBR Equity has traditionally not been a large-cap defined fund, even though it is benchmarked against the S&P Nifty. In 2006, the fund's portfolio was restructured by taking two portfolios and combining them into one. Essentially, the fund is a combination of DSPBR Top 100 Equity and DSPBR Small & Mid Cap. The strategy adopted then has helped the fund build a diversified stock holding. Out of the 87 stocks in its portfolio, its single stock allocation has never crossed 5%, barring a few large caps. While this does put more pressure on the fund manager, the sheer size of the fund probably justifies this kind of a diversification. The fund has an exposure of close to 22% in high beta sectors such as financial services and oil and gas. However, in the financial services segment, the fund is overweight on state-run banks, which are quoting at decent valuations and show growth prospects. A good proportion of its portfolio is invested in steady stocks such as BPCL, SBI, Glaxo Pharma, ONGC, Tata Steel, Bharti Airtel and others.
The fund manager is positive on the consumption sector, infrastructure, capital goods and agriculture for now. As a result, the fund has increased its exposure in automobiles, healthcare, metals and communications sectors. Even though the fund manager claims to be positive on the infrastructure sector, the fund's exposure is limited to the realty segment. It is also swiftly reducing its exposure to the power and logistics sectors. It is interesting to note that DSPBR Equity fund has rarely sat on cash. Even during the financial meltdown, its cash holding was limited to 10%, while some of the diversified equity funds had more than 35% as cash in hand. DSPBR fund manager Apoorva Shah says that churning of the portfolio has been restricted to large-cap stocks rather than mid-cap stocks. He believes that a large-cap portfolio needs to be consistently changed tactically while mid caps can be held till there is a growth opportunity in the stock. Currently the portfolio turnover ratio of this fund is 2.05 times. This means, on an average, the fund holds a stock for six months.
OUR VIEW:
The fund's sound portfolio management strategy has helped it generate consistent returns in varying market conditions. As a result, it has proved to be an impressive long-term performer. DSPBR Equity, which is perceived as a low-risk and high-return diversified equity scheme, is an attractive option for those looking to invest in mutual funds.
