Two manager changes in the last nine months might not impress DSPML Technology.com investors but we feel they have several other reasons to stay put here. By far the most consistent member of the tech category, this fund offers a well-diversified portfolio, spread over large-, mid- and small-cap stocks and relatively low volatility. We believe it is one fund that's well-equipped to handle the turbulent technology sector.
Coming back to issue of change in leadership, the fund house appointed Apoorva Shah as fund manager in April. Prior to joining DSPML AMC, Shah was with GPC India as portfolio advisor and head of products. Shah has also worked with DSP Merrill Lynch for seven years. During his short tenure with the fund, the manager has effected a few changes. He has consolidated the portfolio a bit by bringing the number of stocks down from about 30 to 23. Stocks like Rolta India and Megasoft have been added. Though it's too early to comment on his investment approach, Shah faces the challenge to maintain the fund's consistent performance record in tough times like these.
Except for a minor underperformance in 2001, the fund has always put up a better show than an average peer. In the five-year period ending August 18, 2006, the fund's 37.25 per cent annual return makes it the best in the category. But the fund lost massively during the recent May collapse. Over the three-month period ending August 18, the fund has lost 2.87 per cent, while the category has gained 0.51 per cent. What separates this fund from others in the category is the management's strong conviction in diversification. Except for Infosys, allocation to individual stocks has been restricted to single digit on most occasions. Another important feature of the fund is its love for buy-and-hold strategy. For instance, the fund has been holding Bharat Electronics, Infosys, MphasiS BFL and Satyam Computers since launch.
Last year, when all the category outperformers earned returns through a portfolio heavily skewed towards mid- and small-cap stocks, this fund scored by sticking to a large-cap tilted, well-diversified portfolio.