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DSP Blackrock Small and Mid Cap Fund – Capable of better performance
Sun, Apr 06, 2014
Source : Citrus Interactive

DSP Blackrock Small and Mid Cap Fund is an open ended equity growth scheme which concentrates its investment primarily on equity and equity related securities, which are not part of top 100 stocks by market capitalization. The primary objective of this fund is to create long term capital appreciation from the portfolio. The fund is benchmarked against CNX Midcap Index and it came into existence in Nov 2006.  The fund has an AUM of Rs. 978 crore as of February 2014.

Fund Performance

DSP Blackrock Small and Mid Cap fund has outperformed its benchmark index and the category average return over last 1 year, 3 years and 5 years.

Scheme Name

YTD

1-Year

3-Years

5-Years

Since Inception

DSP Blackrock Small And Mid Cap Fund

-0.46

13.74

7.87

28.33

10.22

CNX Midcap Index

-0.19

4.24

1.93

21.41

6.65

Category Average

2.52

12.65

7.57

22.54

 

Rank

148/153

58/150

66/143

21/126

 

  Figures are in % as on February 28, 2014; Figures above 1-year are in   CAGR

DSP Blackrock Small and Mid Cap fund has consistently outperformed its benchmark during the last 5 calendar years. It has also outperformed the category average in all calendar years barring CY 2011 and 2013. 

 

2009

2010

2011

2012

2013

DSP Blackrock Small And Mid Cap Fund

119.06

29.62

-27.21

45

1.65

CNX Midcap Index

98.97

19.16

-31

39.16

-5.1

Category Average

87.52

19.31

-24.32

34.29

4.67

Rank

6/127

7/135

112/142

20/146

114/154

          

Sector Concentration: The concentration of the fund in the top three, five and ten sectors is much lower than the category median.

 

 

Top 3

Top 5

Top 10

DSP Blackrock Small And Mid Cap Fund

36.35

50.27

76.35

Category Median

44.99

60.27

81.33

 

Company Concentration: The fund is diversified with concentration in top three, five and ten companies in its portfolio slightly lower than the category median.


Top 3

Top 5

Top 10

DSP Blackrock Small And Mid Cap Fund

18.98

28.08

45.65

Category Median

19.33

29.05

46.73

 

Sector & Company Concentration signifies that the funds maintain a fairly diversified portfolio.

Risk and Risk-adjusted Returns: Standard Deviation and Beta (measured over last one year) indicate that the fund has lower risk level compared to the equity diversified category median.

 


Standard Deviation

Beta

DSP Blackrock Small And Mid Cap Fund

0.9411

0.6129

Category Median

0.9955

0.8386

 

In terms of risk adjusted returns such as Treynor ratio and Sharpe ratio (measured over last one year) fund has delivered much higher return per unit of risks undertaken in the portfolio vis-à-vis its category median.

 


Sharpe

Treynor

DSP Blackrock Small And Mid Cap Fund

0.0373

0.0573

Category Median

0.0274

0.0324

 

Process

DSP Blackrock Small and Mid Cap Fund is an open ended fund that invests in companies that are not part of the top 100 stocks by market capitalization. At least 65% of the fund will be invested in the above class of securities and the balance 35% of the fund can be invested in top 100 stocks by market cap. The maximum limit of investment in debt and money market securities is 10%.

This funds main objective is to invest in the future large cap stocks that are either part of the small or mid cap basket in the current market. Such investment is based on the premise that relatively small companies will increase their earnings and grow into larger, more valuable companies. The stock selection is based on the bottom up, stock by stock basis, with consideration given to low Price/Equity, Price/Book, Price/Sales, growth potential, margin improvement, cash flows amongst others. It is expected that the portfolio will experience greater volatility than other equity asset classes, and they may be less liquid than larger cap stocks. Thus, relative to larger, more liquid stocks, investing in stocks, which are not part of the top 100 stocks by market capitalization, involves potentially greater volatility and risk.

The fund’s expense ratio is 2.50 per cent which is in line with the category average of 2.54 per cent. Like most equity funds the fund has an exit load of 1 per cent on or before one year from the date of investment. Minimum investment requirement for the fund is Rs. 5,000.

Portfolio

DSP Blackrock Small and Mid Cap Fund has a diversified portfolio with a stock count of 45 stocks which is higher than the category median of 41. The diversification in terms of number of stock has decreased over time with an average holding of 44 stocks during last one year (as compared to average holding of 60 stocks the previous year). Of the 45 stocks in the entire portfolio 33 stocks are from the cyclical in nature and comprise nearly 62% of the portfolio. The fund has invested nearly 20% in defensive stocks followed by a 15% in services. The top 5 sector accounts for 50% of the portfolio which include exposure in pharmaceuticals, software, finance, auto ancillary and textile products. The top five company holdings in the portfolio accounts for 28% comprising IPCA Laboratories Limited, Persistent Systems Limited, CMC Limited, Arvind Limited and ING Vysya Bank Limited. The portfolio composition of the fund is very stable with most of its top 10 holdings featuring in each of the last 12 months. The fund has added two defensive stocks namely Ipca Labs and Britannia in its top 10 holdings in this year which now consist of 10.7% of the portfolio. The cash level in the fund was 2% in February 2014, which was in line with the low average cash of 2.7% in the last one year.

Fund Manager

The fund is jointly managed by Apoorva Shah (50 yrs) and Vinit Sambre (39 years). Apporva Shah is managing this scheme since March 2008 and Vinit Sambre since July 2012. Apoorva is a PGDM from the IIM Ahemdabad, and brings with him over 26 years of experience in banking and investment. He is with the fund house for last 8 years and had previously worked as Portfolio Advisor & Head of Products and in Institutional Equity Sales with DSP Merrill Lynch Ltd. He is also the Fund/Co Fund Manager for DSPBR Equity Fund, DSPBR Top 100 Equity Fund, DSPBR Focus 25 Fund, DSPBR Opportunities Fund, DSPBR Tax Saver Fund and DSPBR Balanced Fund.

Vinit Sambre has an experience of over 14 years and with the fund house for last 7 years. He has worked earlier with DSP Merrill Lynch as a part of its Global Private Client business and with IL&FS Investsmart Limited as an Equity Analyst in their PMS division. He manages/co manages DSPBR Technology.com Fund, DPPBR Micro Cap Fund and DSPBR MIP Fund (equity portion).

View

DSPBR Small and Midcap Fund has a decent track record of long term performance with a fairly diversified portfolio of mid/small cap stocks. 2013 has not been a good year for mid cap stocks in general. However, on the likely improvement in Indian economy, Mid/small cap stocks across different sectors may show a better performance thus making for an attractive entry point from a long-term perspective. The fund can be a good choice for investors having higher risk appetite for investing in small and midcap stocks.

 
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