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DSP BlackRock Micro Cap

Invest In Tax Saving Mutual Funds Online

Call 0 94 8300 8300 (India)
 

 

We like this fund for its mandate to invest in the smaller capitalised companies which account for as high as 70 per cent of its portfolio. The inherent risk aside, such an allocation gives scope to invest in several undiscovered stocks.

 

Strategy


It seeks to invest at least 65 per cent in equity and equity related securities of companies which are not part of the top 300 stocks by market capitalisation. The remaining 35 per cent might be invested in the top 300 stocks. The AMC has essential in-house research to identify various investment opportunities which focuses on past as well as current financial condition of a company and its potential value creation prospects to invest in the small-cap universe. This fund has a huge small-cap bias, with an average 73 per cent exposure to small-cap stocks this year; yet instead of a long tail, the fund manager maintains a tight portfolio of 46 stocks with exposure to individual stocks going above 5 per cent only on few instances.

 

Performance


This fund was launched as a closed-end fund in May, 2007 which protected it from panic investor exit during the height of the 2008 financial crisis. The risk associated with high exposure to small cap stocks is immense, but this fund has done extremely well, especially in rising markets which is expected from a fund with such an orientation. It turned open-ended in June 2010 and ended the year being the best in the category. It was able to achieve this performance by investing in quality growth companies in the small-cap universe such as TTK Prestige, Kennametal India and Shasun Pharmaceuticals. In 2011, this fund lost significantly, owing to the changing fortunes of the market, which had its cascading effect on small-cap stocks that got hammered.

 

This year, the fund has regained its performance and emerged to be the best in its category. It managed to recover its performance with the rise in the markets and by altering its investments in construction and chemicals sector. Higher allocation and select stock picks helped it earn higher returns.

 

Why invest?


Investors looking for a higher exposure to small-cap stocks will find no fund better than this which exactly does that with great fund management principles. The fund has an exit load of 1 per cent when exited before two years, which one should keep in mind when investing.

 

 

Happy Investing!!

We can help. Call 0 94 8300 8300 (India)

Leave your comment with mail ID and we will answer them

OR

You can write back to us at PrajnaCapital [at] Gmail [dot] Com

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