While DSPBR Balanced might not seem exciting, it will show its mettle in long-term performances…
Though not the most exciting offering around, it won't disappoint over the long run. Its 10-year annualized return of around 21 per cent (as on May 31, 2011), ahead of 80 per cent of its peers, bears testimony to that. However, investors would not be over the moon with last year's below-average returns.
"This is a more defensive fund," says Shah, with reference to other offerings in the category. "In 2010, mid caps out performed large caps significantly and this fund has only 50 per cent portfolio in mid caps." Hence the underperformance with regards to its peers which had a greater tilt towards mid caps.
What hit the fund in 2010, helped it in 2011. As on April 29, 2011, the fund lost 2.87 per cent (category average: -3.29%). A similar trait was noticed in 2008 when the fund's fall was curtailed to 5 per cent less than the category average. At that time, a reduced exposure to equity came to its aid.
Though equity allocation has touched a low of 57 per cent (November 2008), it largely remains within a range of 65 to 75 per cent and has averaged around 69 per cent since 2006.
Despite more than half of its equity portfolio in large caps, this fund follows more of a multi-cap strategy. Once Shah took over mid 2006, the fund moved from a large cap portfolio to make way for mid caps. The equity portfolio of this fund is basically just a replica of the DSPBR Equity which in turn is a blend of the DSPBR Top 100 and DSPBR Small & Mid Cap funds. If Shah brought in the mid-cap blend, he simultaneously increased the number of stocks too, currently at 74. This has resulted in a low concentration with a long tail of stocks (51) that have an allocation of less than 1 per cent. Currently, no stock has an allocation of over 4 per cent.
Neither will you find aggressive sector bets here.
Though stocks like Reliance Industries, ITC and Glaxosmithkline Pharmaceutical etc that have been held for a long period of time, the portfolio is churned quite frequently. Its turnover ratio of 2.32x over the past one year signifies that. But Shah views it differently, "It is an active portfolio and this has always been the investment style where the large cap stocks are rotated regularly to benefit from market volatility in fairly valued stocks. The mid cap portfolio is more structural".
As far as debt is concerned the fund invests in a variety of papers. Currently majority is into debentures with small amounts in Certificate of Deposits (CDs) and preference shares. The average maturity of the portfolio has come down from 1.31 years in November 2010 to 0.23 years at present.
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