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Consistent, But Expensive

DSPBR Savings Manager has a good track record, but its high expense ratio can be a downer…

This one takes its chances and has delivered accordingly. With a leeway to go up to 25 per cent in equity and a small asset base, movements are rapid and opportunistic. Originally, the equity allocation was restricted to the top 100 stocks by way of market capitalisation. That has changed and the equity allocation now follows a multi-cap approach. What’s even interesting is the fluctuation in this asset allocation. For example, in December 2009 it stood at 25 per cent but rapidly moved to 8.48 per cent within two months. Naturally, the number of stocks too will fluctuate and has been known to drop to just 3 (March 2007), when the equity allocation was 7.45 per cent before shooting up to 23 by December that year (equity allocation: 25%).

“It’s a very actively managed fund and we book profits from time to time to give regular dividends. When the market is volatile, the idea is to capture momentum across sectors and stocks. If we think the market is going to go down significantly, we become risk averse and raise cash,” says Shah.

On the debt side, the portfolio did favour floating rate papers till July 2009. “On the one hand the issuance came down and on the other, the liquidity in the secondary market was very low,” explains Choksi. Currently, the fund is focused on Certificates of Deposit (CD). From no allocation to CDs in May 2010, it now averages around 30 per cent of the portfolio. It also currently holds 27 per cent of its assets in bonds and debentures.

“We are focusing on the two key rate durations -3 and 12 months. When we believe that the rates have peaked, we will change our balance from 3 months to 12. So we will increase duration and continue to do that as we come closer to the peaking of the rates,” says Choksi.

Prior to 2010, the average maturity of the portfolio rarely went above 1 year. Though it touched 2.53 years in April 2010, it now stands at 0.73 years.

The fund has consistently delivered above average annual returns, the only blip being 2010 when it returned just 5.23 per cent (category average: 7.56%). In a falling market, the fund has done a fair job. During its worst 1-year period (November 19, 2007 to November 18, 2008), its loss of 6.08 per cent was almost equal to the category average.

The fund was pretty consistent in dividend payment till 2007, declared none in 2008 but got back on track from April 2009.

The low asset base has entailed an expense ratio of 2.14 per cent.