BIRLA SUN LIFE DIVIDEND YIELD PLUS
The fund invests in fundamentally sound companies with a dividend yield at least twice that of Sensex. Dividend paying companies usually have healthy free cash flows, steady earnings growth and a strong balance sheet. This results in steady stock returns over the long-term, while providing relatively better downside protection in times of market correction. The fund also has the flexibility to invest up to 35 per cent in companies facing special situations like de-mergers, buy-backs and open offers, which are used very selectively, with a focus on minimising the downside risk.
| Period | Returns (%) |
| 3-month | -14.94 |
| 6-month | -4.94 |
| 1-year | 17.30 |
| 3-year | 16.13 |
| 5-year | 14.63 |
| Returns as on 14-Feb-11 | |
It has substantial exposure to mid-cap stocks, but this has not translated into fabulous out-performance, even in bull runs led by smaller market cap stocks. But it did put up a good show in 2009 and had held its ground in 2008. Even in the current market turbulence, it has fallen less than the average of its peers. During periods of volatility, the fund increases its debt allocation.
The top sectors in its portfolio are banking, consumer non-durable, software and pharmaceuticals. The fund maintains around 50 per cent exposure to mid-caps and about 20 per cent to small-caps. The large-cap exposure is limited to a few stocks. It limits exposure to individual stocks to less than five per cent of the portfolio.
Its downside protection capabilities have proved the fund gains ground by not losing it in the first place. One would expect this trait from a dividend yield fund, but it's surprising when one considers the high mid- and small-cap allocation. The risky bent is balanced by avoiding aggressive bets and increasing the number of stocks over time. Over the long-term, it proves a worthy bet.
BLACKROCK MICRO CAP REGULAR DSP
The fund will invest primarily in stocks of small companies, which would mean currently investing predominantly in stocks with market cap of less than Rs 3,000 crore. The selection will be based on businesses with scalability as micro-caps are generally varied, not correlated to broader markets and not sector-specific. The fund may also use various derivative and hedging products and techniques to generate better returns.
| Period | Returns (%) |
| 3-month | -21.33 |
| 6-month | -14.29 |
| 1-year | 18.95 |
| 3-year | 7.90 |
| 5-year | - |
| Returns as on 14-Feb-11 | |
It started off as a close-ended offer and was converted into an open-ended one in June 2010. Investors here are a happy lot, though they had some tense moments in 2008 as the fund got hit. However, it did not face much redemption pressure. And has rewarded its investors well since then. It steamrolled ahead in 2009 and in 2010 was the best performing one in its category.
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Despite five fund managers in a little over three years, the fund house’s strong core management team has done a good job. The fund sticks to its mandate and holds close to 70 per cent in the less-than Rs 3,000 crore market-cap segment and none in the above Rs 7,000 crore category. The fund remains fully invested, with well over 90 per cent equity exposure at any given time.
The fund manager very wisely ensures that individual stock bets are not high. Currently, none crosses four per cent of the assets. Nevertheless, the fund is a risky bet. It invests only in mid- and small-caps and avoids large-caps. More, it does not flee to cash during market downturns. This makes it volatile. Yet, it has outperformed other mid- and small-cap funds by a huge margin, mainly due to its good stock picking techniques.
HDFC MID-CAP OPPORTUNITIES
The fund aims to generate appreciation by investing mostly in mid-cap stocks. The risk of holding such stocks is reduced by maintaining a well-diversified portfolio. While the portfolio will primarily focus on a buy-and-hold strategy at most times, it will balance the same with a rational approach to selling when the valuations become too demanding even in the face of reasonable growth prospects in the long run. The fund may also seek investment opportunity in ADR/GDR/foreign equity and debt securities up to a maximum 25 per cent of net assets. The fund’s mandate is to invest at least 70 per cent in mid-cap stocks and five per cent in small-cap stocks.
| Period | Returns (%) |
| 3-month | -14.66 |
| 6-month | -4.15 |
| 1-year | 17.65 |
| 3-year | 9.29 |
| 5-year | - |
| Returns as on 14-Feb-11 | |
Launched in June 2007, it made its mark the very next year. It contained the 2008 downside a lot better than its peers because of its then close-ended status. That year, the fund also outperformed its benchmark, the CNX Midcap. With no redemption pressure, it retained 92 per cent equity allocation through 2008, before the market began to turn around in 2009. In 2010, the fund turned open-ended.
Banking, capital goods, pharmaceuticals and auto and auto ancillaries are the top sectors. The portfolio comprises around 50 stocks. On an average, 60 per cent of the portfolio is in mid-caps and 30 per cent in small-caps.
It increased its exposure to value stocks in 2010. That helped it turn in a good performance last year and also checked volatility in returns. If one looks at the long-term return, as well as the annual returns of 2009 and 2010, this one has emerged a winner.