DSPML Opportunities Fund: Waiting for the right chance

DSPML Opportunities Fund is a diversified equity fund that invests in scrips across market caps. As it has been one of the more consistent players over time, it should make sense to include DMOF in your portfolio.

Fund strategy

DMOF is an aggressive equity fund from DSP Merrill Lynch Mutual Fund and diversifies across scrips and sectors. Depending on the fund manager's perspective, the fund can even take concentrated bets on sectors.

Unlike DSPML's other fund, DSPML Equity, it does not follow a buy-and-hold philosophy and churns the portfolio as and when it finds the right opportunities, which is quite often. The fund's top three sectoral holdings are in software, industrial capital goods and cement.

The fund manager believes that Indian software companies are well-placed enough to bag international orders that would boost their revenues. The fund manager also believes that India's continued thrust on infrastructure development will result in more infrastructure projects being taken up. Such moves augur well for companies that manufacture equipment to facilitate such projects.

DMOF has held around five per cent cash on an average so far this year, although its internal risk controls allow it to hold up to 30 per cent cash.

Sound performance

DMOF's one-year rolling return is 58.4 per cent as against 51 per cent by the category average and 53 per cent by the Sensex. It also boasts of a good long-term track record. In the past five years, the fund's compounded annual growth rate was 53.5 per cent, higher than 45.1 per cent pegged by the category average and 34.1 per cent pegged by the Sensex.

DSP Merrill Lynch has a sound track record in the equity segment of the market. Of the 86 diversified equity schemes that we considered, all schemes coming from the DSP Merrill Lynch Mutual Fund's stable have outperformed the category average in the past one year risk-adjusted return countdown.

Its own DSP ML Tiger Fund has been the best scheme from the fund house and has performed better than DSPML Opportunities Fund. However, since DMTF is a thematic fund, it carries a higher risk compared to DMOF and, therefore, does not appeal to all types of investors. DMOF is, comparatively, more diversified and, hence, better geared for the next three years.

Fund manager

Fund manager Anup Maheshwari had left the fund house last year, but is now back again with DSP Merrill Lynch Mutual Fund. This is another piece of good news and bodes well for you and the scheme.

DSP is one of the few fund houses in India that is trying out new ideas in the funds space. For example, it experimented with bundling insurance with investment in its Super SIP (systematic investment plan) one year back.

Although a great idea for a particular category of investors, the fund house found the idea ahead of its time and had to discontinue it. But do look out for more such innovations from DSP.

Why buy

• Sound track record in equity investments
• Invests across market cap stocks
• Well diversified across sectors and scrips