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DSPBR Equity is a well-diversified fund and generates returns in a consistent manner

With no market capitalisation or sector bias, it goes about generating returns in a fairly consistent fashion. Like many of its peers, it hit a rough patch during 2000-02, but ever since 2003, it has beaten the category average every single year. In 2007, the fund turned in a handsome 70 per cent return, making it a top quartile performer. And when the bears took over in 2008, the fund protected the downside well and fell less than the category average.

In 2007, the fund had an average exposure of only 45 per cent to large-caps, which worked in its favour since mid- and small-caps soared. But the market turmoil in 2008 has ensured that at least half the current portfolio is in large-caps. That, coupled with the increased cash and debt allocation, as well as higher exposure to FMCG and healthcare, is what saved the fund during the market crash.

However, the fund started to reduce its average exposure to healthcare and FMCG stocks, but at around 17 per cent, between March to June 2009, it was still higher than the category’s 13 per cent and thus the fund delivered just 58.55 per cent as compared to category’s 71 per cent in the rally (March 9, 2009 to 30 June 2009).

A unique aspect of DSPBR Equity is its rigorous diversification. The fund’s exposure to the top 10 holdings does not generally cross 35 per cent. The number of stocks has gone up considerably, peaking at a high of 90, while half the portfolio will have an exposure of less than 1 per cent to an individual stock. Being an actively managed fund, a number of stocks are held for five months or less.

The multi-cap exposure, broad diversification and consistent returns are what make this fund a good pick.