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DSPML Opportunities Fund

The fund is well positioned for those seeking to invest in selective sectors poised for a turnaround with the changing economy

DSPML Opportunities Fund aims at long-term capital appreciation with a specialty theme. The fund seeks to rotate its investments across sectors in line with the dynamically changing Indian economy. Thus, with a nimble footed strategy, the fund could shuffle its bets across sectors like pharma, lifestyle, cyclicals and technology with concentration in one or two sectors.

With the fund's launch in April 2000 coinciding with the meltdown in ICE stocks, the NAV of the fund has hovered below par. While the technology sector accounted for half of the portfolio till October 2000, the fund has shifted gears in favour of cyclical stocks. At present, cyclicals make up for 72% of the portfolio with technology a distant second at 16%. The new fund manager at the helm in March 2001 saw the fund exiting from its marginal holdings in pharma stocks.

Liquidity of stocks has been the key issue since the markets came under rolling settlement. DSPML Opportunities Fund has made a timely exit from its mid cap stocks like Visual Soft, Bharat Electronics, DSQ Software and Digital Equipment for their low liquidity. On the other hand, the fund has consistently held on to its top IT picks of Infosys, Satyam and Wipro.

Although a limited diversification across 2-3 sectors makes DSPML Opportunities less vulnerable than a pure sectoral fund, concentrated investments in a couple of sectors makes it more volatile than a diversified equity fund. It also runs the risk of taking a wrong call on a sector.

In its brief history, DSPML Opportunities has returned a (-) 27% against a (-) 26% loss for Nifty Total Return, thus marginally underperforming the benchmark. With the fund pursuing a dynamic investment approach with a flexible investment charter, investors should stay put with a long-term perspective. Further, the fund is no substitute for a diversified equity fund.