When Apoorva Shah took over the fund in 2006, there was no dramatic change in the portfolio except that the mid cap allocation began to get a bit more generous. But that does not imply an aggressive portfolio.
In fact, Shah shies away from taking aggressive sector bets and prefers dabbling in a large number of sectors. This obviously results in a lower allocation to the top three sectors. At 31 per cent over the past year, it's definitely lower than the category average. The number of stocks too is huge and it has gone to as high as 90 (August 2008). Though a significant number of them have a tiny allocation. While this could also result in returns being diluted, the reason for such a bloated portfolio is that this fund seeks to combine the portfolios of the large cap fund (DSPBR Top 100) and the small- & mid-cap fund.
The fund largely remains within the 65 to 75 per cent equity band, though there have been occasions when it has dropped below 65 per cent. In the market downturn, equity exposure dropped to 57 per cent (November 2008).
The fund manager was caught off guard with the market rally that began in March 2009. His equity allocation stood at 67 per cent with almost 60 per cent of the portfolio in large caps.
“Last year we were too defensive when the market turned ferociously. Once we adjusted our portfolio and re-positioned it we began to perform well,” says Shah. Since then, the equity exposure has ranged between 69 and 72 per cent while large cap exposure dipped.
Despite the highly diversified portfolio, Shah does a large amount of churning. Currently, the fund has a turnover ratio of 242 per cent. As of now, the fund holds 83 stocks, out of which 54 stocks (65%) have an allocation of less than 1 per cent. However, Shah tends to view this differently. “I would say that we actively manage the fund. Most of the turnover is done in the case of large caps because a number of the mid caps are long-term bets which have to be played out,” he explains.
Though the fund over the years had dabbled in various debt instruments, it largely maintains a conservative stance on the debt side.
A good bet for the conservative investor.