VR Logo

Shunning Aggression

This fund has delivered, but not exactly the way it is supposed to. Investors will do well to ignore the word 'opportunities' in its name and treat it like any other diversified equity fund

DSPML Mutual Fund projects DSPML Opportunities as a tactical fund that will attempt to maximise returns through aggressive sector and stock specific calls. It began life that way in April 2000. However, tech meltdown that year saw its NAV crash soon after, forcing the fund to dilute its aggressive stance. Since then, it is run more like any other diversified equity fund. Having said that, the fund has done extremely well. In the five-year period ended April 3, 2006, the fund's 49.63 per cent return makes it one of the top 10 funds in the category. In three of the five calendar years of its existence, the fund has delivered top-quartile returns and has been consistently rated four-star by Value Research.

The fund's launch coincided with the tech bubble bust. Worse, nearly half of the portfolio allocated to tech stocks made the fund bleed heavily. It started below par and lost 15 per cent by the end of 2000.

Though it diluted some aggression, yet it remained heavily invested in tech stocks. The strategy bombed. Tech stocks continued to bleed. By mid-September, the fund's initial investors had lost more than 45 per cent of their assets. By now, the fund management was convinced that it was time for introspection. The fund started to buy more stocks and cut exposure to individual stocks and sectors.

Today, it has a well-diversified portfolio dominated by large-caps with ample representation of mid- and small-cap stocks and is good enough to be core of any long-term portfolio. In the past four years, the fund has seen its assets swell nearly 24 times.

Lately, the fund is showing signs of regaining aggression. However, that is limited to one or two sectors. At the stock level, there's no sign of any aggression though. Except for a brief period in late 2001 and mid 2003, tech stocks have dominated the portfolio. The fund believes in buy-and-hold strategy. Grasim Industries, which the fund held since start, has turned a multi-bagger.

Last month, the fund underwent a change. Soumendra Nath Lahiri, who is managing DSPML TIGER for the past one year, will be in charge of the fund.

Overall, the fund has a well-balanced portfolio. It has displayed ability to capitalise on good times. It is one of the better funds around.