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DSPML Equity Fund

Dhirendra Kumar

DSPML Equity is a diversified equity fund launched in April 1997. The fund seeks long-term capital appreciation with up to 90 per cent investment in equities under normal circumstances. The fund has paid two dividends of 20 per cent in June 1999 and 35 per cent in March 2000. The fund charges an entry load of 2 per cent for investments less than Rs 500,000, 1.75 per cent for investments between Rs 500,000-2.5 million and 1.5 per cent for investments of over Rs 2.5 million.

FUND BASICS   Objective    Size (Cr)    NAV: 30/04/2001    Exit Price    Entry Price    Total Return   Growth   39.25   13.50   13.50   13.78   13.93%

In its four years tenure, the fund has delivered a return of 13.97 per cent against the market return of 4.04 per cent by pursuing various investment strategies. Initially in a range bound market, the fund remained heavily in cash. Shifting from the questionable strategy, the fund largely invested in a diversified bundle of stocks while actively rotating in and out of sectors. While infotech, consumer goods and pharma were among the top sectors, the fund carried a fair allocation to economy stocks.

However, with the new manager at helm in the late 1999 the fund witnessed a complete change in strategy. Fresh thinking coupled with the rising valuations of the ICE sector saw DSPML Equity seek a higher allocation to technology stocks. With investments in Telecom and Media sectors in the last quarter of 1999, the ICE allocation peaked at 61 per cent in March 2000. While the fund scaled a high of Rs 42 in early 2000, the performance was not sustainable. Its unhealthy concentration cost the fund and saw it lose 32 per cent in 2000 against the category average loss of 20 per cent. Further, the fund's buying into unlisted securities such as SIP Technologies at the peak of the rally has eventually turned out to be a drag on the portfolio.

BENCHMARK COMPARISONS (%)      1M    3M    6M    1Yr    3Yr   Fund   -10.77   -27.03   -17.41   -37.28   6.76   Nifty Tot. Ret.   -6.35   -19.50   -6.41   -21.90   -0.58   Sensex   -7.36   -20.96   -8.22   -26.86   -5.71   Obj. Avg.   -6.13   -24.18   -16.60   -30.16   2.99

    Since the meltdown, the fund has acquired a more diversified flavour with investments in quality stocks. While technology stocks account for an average 30% for the quarter ending March, the portfolio is well spread across consumer stocks (17%) and economy stocks such as diversified and petroleum companies.

DSP Equity Fund is an actively managed fund and currently owns a diversified portfolio of quality stocks. Though the fund stands diversified today, it has to be seen whether the new fund manager continues to maintain the same complexion for steady returns.

Top Holdings (31/03/2001)      Value (Cr)    % of Assets   Reliance Industries   6.10   15.54   Larsen & Toubro   3.87   9.87   Infosys Tech.   3.16   8.06   I T C   2.96   7.55   HLL   2.91   7.41   Grasim Industries   2.51   6.39   Reliance Petroleum   2.37   6.04   Satyam Computer Services   2.00   5.11   ACC   1.92   4.89   S I P Tech.   1.73   4.41   India Cements   1.37   3.50   State Bank Of India   1.31   3.33   Sterlite Optical   1.06   2.70   Cipla   1.00   2.54   MTNL   0.93   2.36

Source: Value Research

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