DSP BlackRock Opportunities Fund: Timely sectoral calls help outperform

Launched in May 2000, DSP BlackRock Opportunities Fund is classified under the diversified schemes of CRISIL Mutual Fund Ranking. It has featured in the top 30 percentile (CRISIL Fund Rank 1 or 2) in the four consecutive quarters ended June 2017. The fund's quarterly average assets under management (AUM) tallied at Rs 2,450 crore in June 2017 under the guidance of Rohit Singhania.

The primary investment objective of the scheme is to generate long term capital appreciation and the secondary objective is income generation and the distribution of dividend from a portfolio constituted of equity and equity related securities concentrating on the investment focus of the scheme.

Consistently ahead

The fund has consistently outperformed the benchmark (Nifty 500) and its category (funds ranked under the diversified category in June 2017 CRISIL Mutual Fund Ranking) in all time frames under analysis.

Out of six market phases, the fund outperformed the category in the two recent phases of Chinese slowdown and global liquidity, and the domestic reforms-driven rally. However, it outperformed the benchmark in all the market phases. During the recent rally, the fund outdid the benchmark and its peers with a significant margin.

An investment of Rs 1,000 in the fund on May 16, 2000 (its inception) would have grown to Rs 20,912 on September 4, 2017 at an annualised rate of 19.19 per cent, surpassing the category and the benchmark which would have grown to Rs 17,102 (17.82 per cent) and Rs 9,268 (13.72 per cent), respectively. 

A systematic investment plan (SIP) is a mode of investment offered by mutual funds to retail investors through which one can invest a certain amount at a regular interval. DSP BlackRock Opportunities Fund outpaced its benchmark in all periods. 

Portfolio analysis

As of July 2017, the fund's portfolio held 66 stocks from 24 sectors. Over the past three years, the top five sectors constituted 59.16 per cent of the portfolio, on average, which indicates substantial sectoral concentration. The highest exposure was to banking (25.79 per cent), followed by software (8.88 per cent), pharmaceuticals (8.72 per cent), petroleum products (8.42 per cent) and auto (7.35 per cent).

Banking has been a major contributor to the fund's outperformance owing to high exposure combined with the outperformance of the underlying stocks. Particularly in the last one year, the fund increased allocation to the
banking sector, amplifying its returns. 

fund, 

On the other hand, the fund has cut down exposure to the software and pharmaceuticals sectors over the past three years. The timely sectoral calls benefitted the fund since these sectors have underperformed the broader market indices during this period. 

Over the past three years, the fund has consistently held 12 stocks accounting for average exposure of 28.72 per cent. Eleven out of 12 stocks outperformed the fund's benchmark in their respective holding periods, demonstrating strong conviction and a successful stock-picking strategy.

Top contributors among the consistently held stocks include Hindustan Petroleum Corporation, HDFC Bank, IndusInd Bank, Bharat Petroleum Corporation and Maruti Suzuki India.

CRISIL Research