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Born Leader

In two years, this fund has gained in stature. While quality is the watchword here, the fund manager takes calculated risk and rewards the investors. Though new, this fund deserves a look

With an 11 per cent return and a lower-than-average standard deviation, DSPML Savings Plus Moderate has established itself as a quality MIP in its two year history. Except for this last quarter, the fund has always outperformed the category average. Given the turmoil in the bond markets in late 2003 and 2004, this is commendable. Last year, its 7.34 per cent returns saw it to the top quartile of the category.

The prime reason for this has been that the fund has used its mandate of investing up to 20 per cent in equities-higher than most of its peers-to reap the current stock market boom. Its equity exposure has rarely fallen below 10 per cent and has sometimes crossed 18 per cent.Despite its love for equities, the fund maintains a fair distance from relatively riskier mid- and small-cap stocks. While small-caps are yet to find a place in the fund's portfolio, exposure to mid-caps too have remained low. Large caps like SBI, Ranbaxy Laboratories, ONGC and Grasim Industries have led the equity portfolio and helped the fund keep the volatility under check.

On the debt side, the emphasis is on quality with stress decisively either on AAA papers or gilts. For example, the fund started off with a gilt-heavy portfolio and continued it till April 2004. Since then, AAA papers have taken over. In fact since September 2004, gilts have formed an average 4.44 per cent of the portfolio.The fund does not bet high on interest rates. It plays its average maturity card quite conservatively and maintains it below category average. For example since May 2004, the fund has kept its average maturity below one year (0.24 years as on February 28, 2005) as against 1.72 years for the category.

Though the fund's preference for safety is quite obvious in its equity as well as debt portfolio,it does not hesitate to bet occasionally on below AA papers to squeeze in some extra returns-as on February 28, 2005, exposure to them was as much as 17 per cent, an all-time high since July 2003.