VR Logo

Grabbing Opportunities

With a rare combination of below average risk and above average returns, the fund has done well in the last three years. Investors looking to benefit from sectoral bets will like this fund

Though the fund has the word 'opportunities' in its name, it has donned a diversified look in the past few years largely due to a broad-based rally in the market. Despite extending its investments across sectors, DSPML Opportunities Fund has always been among the category toppers. In the past two calendar years, the fund was ranked among the top quartile funds in the category. The fund has continued its good performance in 2004 as well-it's up 15 per cent, beating two-third funds in the category.

Through 2004, the fund's favourite sectors have been technology, financial services, energy and auto, together accounting for half of the fund's portfolio. With this slight sector concentration, the fund limited its downside in the early part of the year and then in the subsequent rally, it managed to perform in line with the category average. Encouragingly, the fund has avoided risky mid-caps in 2004. Instead, it has scouted for large-cap stocks in its portfolio. The fund has always invested in stocks with a long-term horizon. For instance, its top holdings such as Grasim Industries, Infosys, SBI and Reliance Industries have been in the portfolio for over three years. However, the fund's volatility is slightly higher than that of the average peers.

The previous two years—2003 and 2002—were the best years for the fund as it landed in the top quartile of the category. In 2003, an underweight position in IT before Infosys tanked and winning stocks such as ITC, Ranbaxy, Grasim and L&T helped. Then an overweight position in bank, auto and pharma stocks also boosted its returns. In 2002, an increased allocation to mid-caps helped it turn in decent returns. It also raised its allocation to the then-performing sectors like auto, FMCG and financial services. This performance was even more encouraging after an unimpressive performance in 2001 when it did worse than the average equity fund.

With a rare combination of below average risk and above average returns, the fund has done well in the last three years. Its current diversified look is an outcome of the broad-based rally but it may move into specific sectors once it expects significant price appreciation. Thus, adventurous investors should scout for exceptional gains here.