DWS Investment Opportunity has been constantly featuring in the top performing equity funds list every single day. And in a market where funds are struggling to stay in positive territory, it is a remarkable feat.
Aniket Inamdar, the fund manager, has displayed the ability to successfully chart his own course. Nowhere is it more apparent than in DWS Investment Opportunity. The fund was an extremely risky proposition which would attract only the boldest of investors. For instance, in February 2006, the number of stocks was just 17 with the top five holdings accounting for 44.62 per cent. The portfolio was not even laden with large caps but had a 44 per cent tilt towards mid- and small-caps.
Inamdar's first move was to broaden the base. Over the past year, the top five holdings accounted for around 23 per cent while the number of stocks has averaged at 36. This moderation has delivered excellent results. The fund was looking pretty lousy till December 2005. Though performance improved in 2006, it was only when he took over in 2007 that it began to impress. Investors noticed and flocked to it causing assets to rise from Rs 9.63 crore (May 2007) to Rs 147.19 crore (July 2008).
Despite real estate stocks doing pretty well last year, he refrained from investing in real estate developers and preferred to cast his lot with companies that owned land banks. So while real estate companies per se did not made an appearance in this fund, stocks which have substantial land banks like JP Associates, Century Textiles and Bombay Dyeing have been bought at various points in time. But when construction and real estate stocks began to zoom last year, he succumbed to the temptation and bought Marg Ltd, Supreme Infrastructure India Ltd and HCC in December. These picks, along with the metals and energy allocation of 12.71 per cent and 16.71 per cent respectively in December 2007, is probably what contributed to the superb performance last year (BSE Metals delivered 121.47 per cent and BSE Oil & Gas, 115.25 per cent in 2007). But real estate stocks collapsed early this year (BSE Realty delivered -40.64 per cent in the first quarter), and he exited from the above three stocks.
His move into commodities was also timely. In September 2007 he had stated that the prices of commodities like iron ore, coal and bauxite are faced with limited supply but strong demand in countries like India and China. He believed that natural resources companies looked promising on a demand-supply basis and also felt that valuations at that time were not demanding if seen with this perspective. So he picked up stocks like Sterlite Industries, Tata Steel, Ashapura Minechem and Gujarat NRE Coke in addition to Kalyani Steels and SAIL which were already in his portfolio. From a 5.13 per cent allocation to metal stocks in October 2007, it went up to 17.95 per cent in February 2008.
Going by the way the fund manager delivered last year and how he has handled the market slump, the well diversified portfolio and the 59 per cent large-cap allocation, this fund is definitely worth a consideration.