DSP Equity: A superior multi-cap fund with a large-cap disposition

Systematic investment plan is a disciplined mode of investing, offered by MFs, through which one can invest a certain amount at regular intervals

The DSP Equity Fund ranked in the top 30 percentile of the multi-cap category of the CRISIL Mutual Fund Rankings (CMFR) for the last three quarters ended September 2019. The fund has been managed by Atul Bhole since June 2016. 

Assets under management of the scheme increased over 18 per cent in absolute terms over the past three years, from Rs 2,359 crore in October 2016 to Rs 2,786 crore in September 2019.

The investment objective of the scheme is to generate long-term capital appreciation, from a portfolio that substantially comprises equity securities and equity related securities of issuers domiciled in India.

Trailing returns

The fund has consistently outperformed the benchmark (Nifty500 TRI) and its peers (funds ranked under the multi-cap funds category in September 2019 CMFR) in all the trailing periods under analysis. 

An investment of Rs 10,000 in the fund on June 7, 2007, (inception of the regular plan growth option of the fund) would have grown to Rs 42,328 on November 11, 2019, at an annualised rate of 12.30 per cent, compared to the category and benchmark that would have grown to Rs 38,075 (11.35 per cent pa) and Rs 32,235 (9.87 per cent pa) respectively. 

Systematic investment plan (SIP) is a disciplined mode of investing, offered by MFs, through which one can invest a certain amount at regular intervals. Monthly investment of Rs 10,000 for the last 10 years, totalling Rs 12 lakh, would have grown to Rs 23.16 lakh (12.75 per cent annualised returns) compared to Rs 21.49 lakh (11.33 per cent annualised returns) in the benchmark as on November 11, 2019. 

Portfolio analysis

The fund’s portfolio has been diversified across market caps, with predominant exposure to large-cap stocks. 

Allocation to large-caps averaged 64.47 per cent during the past three years. Mid-cap and small-cap stock exposures averaged 17.08 per cent and 15.96 per cent respectively, during the same period. 

The fund has actively managed allocations across market caps during the period under analysis, while maintaining a substantial allocation to large-cap stocks.

The portfolio was diversified across 28 sectors in the past three years. Banks had the highest average allocation of 21.91 per cent followed by finance (10.61 per cent), consumer non-durables (9.27 per cent), cement (5.88 per cent), and software (5.13 per cent).

The fund invested in 122 stocks in the past three years and consist­e­ntly held 11 stocks. Bajaj Finance, ICICI Bank, HDFC Bank, V-Guard In­­dustries, and Asian Paints have be­en the major contributors to the fu­nd’s performance during this pe­r­iod and were also consistently he­l­d. Out of the 11 consistently held st­­ocks, seven outperformed the fu­n­d’s benchmark in the last three years.