Quality debt and low expenses have proved rewarding
Investors in DSPML Balanced fund have reasons to be happy with the fund delivering decent returns over the years. With an average equity-debt ratio of 63:24 since launch in May 1999, the fund has raked in an annualised return of 32 per cent over the past five years, better than its peer’s 29 per cent. In the past one year, DSPML Balanced has again managed to better the category average with a return of 11.29 per cent. However, its ranking on the return charts has slipped. The fund was positioned 10th among the category’s 29 members.
Historically, DSPML Balanced has a record of staging comebacks after slowdowns. For example, after under performing its category in 2005, the fund made a smart comeback. Similarly, the fund came out of the trough of 2000 and 2001 by shifting focus out of the technology stocks and made it to the top half of the category in 2002. The fund’s large-cap orientation has, over the years, helped it lose less than an average balanced fund during market collapses. However, since October 2006, the fund has been increasing its exposure to small-cap companies. Allocation to small-caps has gone up from 9 per cent of total assets in October 2006 to 16.6 per cent by end March 2007. This might bring in some volatility. On the debt front, the fund focuses on quality. It has increased its debt exposure from 23 per cent in October 2006 to 36.13 per cent by March 2007. On the equity side, the fund is currently bullish on technology and energy companies. In fact, it hugely increased its allocation to the energy sector over the past six months. Holdings like TCS, Reliance, NTPC and L&T have proved hugely rewarding over the years.
In short, a large-cap-dominated portfolio together with quality debt holdings and a relatively low expense ratio make DSPML Balanced one of the better equity-oriented balanced funds.