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DSPML Savings Plus Moderate

The fund’s investment in equties is restricted to top 100 companies by market-cap resulting in a quality portfolio

Equity is the key to this fund’s success and since stock markets have taken a beating, DSPML Savings Plus Moderate (like all other equity-heavy MIPs) has suffered. Between May 10 and June 7, the fund lost 4.17 per cent, taking the year-to-date return to a meager 2.26 per cent.

The fund had no choice but to bank on equities to overcome its last year’s underperformance — allocation to stocks went up from 8.67 per cent in October last year to a high of 17.72 in April. And when the tide turned against in May, the fund took a beating.

A large-cap orientation helped the fund reduce some pain. The fund management, though, has taken corrective measures and cut the equity exposure to about 12.50 per cent.

Notwithstanding the recent fall on the equity markets, DSPML Savings Plus Moderate is among the better funds in the category for its quality equity as well as debt portfolio, low volatility and decent performance track record.

The stress has been on safety and the fund has maintained a debt portfolio with relatively low maturity profile, consisting mostly of short-term and medium-term floating rate assets. On the equity side, the investment universe is restricted to top 100 companies by market capitalisation, translating into a quality portfolio. As a result, its standard deviation has always been less than that of an average peer.

The fund performed exceeding well in 2004 when it earned a top-quartile return of 7.34 per cent. However, it could not sustain its lead over some of its aggressive peers in the next year, as they earned handsome returns by investing in sizzling mid- and small-cap stocks. This year, when the tide turned in favour of large-caps, the fund made up for the lost ground.

DSPML Savings Plus Moderate is decent fund for those who want the power of equities but not huge risk. The fund looks good for its quality portfolio. One thing to watch out for is the change in managers recently in April.