DSP BR Opportunities Fund - Clinch This Opportunity

Global uncertainties, elevated inflation and consequent rate hikes by the RBI have seen growth take a backseat. While global uncertainty is expected to prevail and equity markets to remain volatile in the near term, from a valuations standpoint, the market continues to look attractive in the medium to long term. Besides, a peaking rate cycle, good monsoons and softening commodity prices in the near term on account of a global slowdown could provide additional triggers for the Indian equity market. Hence, to help you capitalise on the opportunities available in the market, we present DSP BR Opportunities Fund as our choice for the Fund of the Fortnight. This fund invests across market caps to generate an alpha for investors.

DSP BR Opportunities Fund is a diversified equity fund that has an opportunistic investment approach, with aggressive sectoral and stock positions aiming to maximise performance. The fund has a good mix of Large-Cap and Mid-Cap stocks in its portfolio, with Large-Cap stocks historically accounting for more than 65 per cent of its total net assets under management.

The fund is managed by Anup Maheswari since Nov 2006, along with Harsha Upadhyaya, who has been working with him since September 2011. Upadhyaya has earlier success-fully managed the UTI Opportunities Fund, which was among the top performing schemes in its category during his stint.

In terms of its portfolio, unlike many of its peers, the fund does not take aggressive cash calls, with allocations not extending five per cent in most months. The fund also does not take high stock-specific calls. The fund is well-diversified, its portfolio consisting of more than 60 stocks, with the top 10 stocks accounting for only 35 per cent of it. However, the fund managers do take concentrated sectoral bets, with the top three sec-tors accounting for as much as 43 per cent of the net assets. As of September 2011, the fund is overweight on pharma, telecom and fertilisers and under-weight on ferrous metals, construction projects and finance, as compared to the benchmark. The fund has invested in companies with slightly higher valuations than the benchmark, with its P/E being 21.54x, as compared to the PE of 16.55x of the benchmark.

The performance of the fund has been consistent, and it has generated a CAGR return of 19.79 per cent since its launch. The market has generated positive returns in four of the last five calendar years, and the fund has outperformed its category in all the four years. However, in the bear market of 2008, it underperformed its category average. In terms of risk-adjusted return, the fund scores better than its category average, with a Sharpe Ratio of 0.48.

DSP BR Opportunities Fund has a strong fund management team, and is well positioned to generate long-term superior risk-adjusted returns for its investors. As the fund has the flexibility to change the portfolio composition depending upon the changing market trends, it can be looked upon to form a core part of investors’ portfolios.