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Getting Its Act Together

DSPML Balanced Fund's turnaround story is impressive, which makes it one of the category's hot favourites. Investors can expect a stable return over the long-term here.

After being a dormant player for long, this fund is in top gear now. In the last six quarters, it has beaten its peers on five occasions. A large-cap and diversified equity portfolio together with quality debt holdings has kept the fund in good health. Though volatility has been above average, the fund has done well in delivering decent risk-adjusted return to the investors.

Barring few occasions, especially during equity market rallies, the fund has re-balanced its portfolio in a highly efficient manner. On an average, it has maintained equity:debt exposure of 64:36 per cent. Earlier in the current bull run, a high exposure to healthcare stocks proved rewarding while lately, it has ridden the equity rally on the back of bank and energy stocks. The three sectors together account for half of the equity portfolio. The fund's top picks like SBI, Grasim and HPCL have made strong gains in the rally.

The fund's good show has continued in the recent volatile months of 2004. From January 14 to May 17, the Sensex lost 27.3 per cent and the average hybrid fund was down 16.2 per cent but DSPML Balanced lost just 12.2 per cent. During the period, the fund re-entered BHEL and Reliance Industries. It also participated in the IPOs of PTC and Biocon, which was listed at a huge premium.

During initial few years of its launch, the fund kept a very high exposure to tech stocks resulting in its poor performance through 2000 and 2001. Though the fund reduced its tech holding post 9/11, but didn't turned out to be a great move as tech gained the most post-9/11 rally. The fund's luck finally unfolded in the last quarter of 2002, when the overall sentiment in the equity market revived. Since then, the fund has never looked back.

On the debt side, the fund has been very quality conscious. In the past three years, it has only invested in AAA rated bonds and government securities. Currently, gilts dominate the fund's debt portfolio. Fund's improved performance of late has polished its image as a decent hybrid offering. Investors can expect a stable return over the long-term here.