Getting the right balance

FUND PICK: DSPML Balanced Fund

The fund has a large-cap bias and relatively low expense ratio.

DSPML Balanced was launched in May 1999. The fund does not charge any entry load but levies an exit load of 1.25 per cent for redemption within 365 days.

This fund's turnaround story and its ability to protect the downside risk are laudable. A large-cap bias, relatively low expense ratio and below average standard deviation make this fund one of the better balanced funds. It's these qualities that have made us include this fund in our fund focus section despite a below average performance in the last four quarters.

Coming back to its underperformance, DSPML Balanced has added 32.11 per cent in the previous four quarters against the 36.91 per cent return of its peer group average. A stress on large-caps over mid-caps, as well as an overweight position in healthcare and metal stocks, has affected the fund's performance.

But this fund has managed to bounce back smartly out of similar situations in the past. For example, during its early life a tech-loaded portfolio resulted in poor performance through 2000 and 2001. It found a place in the bottom half of the category in the two years. It reacted to the situation by cutting the exposure.

The fund's luck finally unfolded in the last quarter of 2002, when the overall sentiment in the equity market revived. Since then, the fund has never looked back. In the last two calendar years, the fund has put up a top quartile performance.

A large-cap, diversified equity portfolio together with quality debt holdings has worked for the fund. Barring few occasions, especially during equity market rallies, the fund has re-balanced its portfolio in a highly efficient manner. On an average, it has maintained an equity:debt exposure of 64:36 per cent.

The fund has polished its skills of protecting returns in tough times. For example, DSPML Balanced lost less than category average in the first half of last year. In the first quarter of 2003 too, the fund slipped only 1.28 per cent against an average 3.96 per cent loss for peer group.

On the debt side, the fund has been quality conscious. However of late, it has started betting on below AAA papers to boost returns.

A low risk debt portfolio and a bias towards large-caps in equities make this fund a safe choice.
 

Top holdings
As on August 31, 2005	Value (Cr)	Net Assets (%)
SBI	8.42	3.37
Infosys Technologies	6.97	2.79
Larsen & Toubro	6.30	2.53
Punjab National Bank	6.27	2.51
IDBI	6.11	2.45
Reliance Industries	6.08	2.44
B H E L	6.03	2.42
Thermax	5.60	2.24
Glaxosmithkline Pharma	5.34	2.14
Indoco Remedies	4.97	1.99
Siemens	4.94	1.98
Williamson Tea Assam	4.94	1.98
Grasim Industries	4.82	1.93
Dabur India	4.82	1.93
Bharat Earth Movers	4.32	1.73
Top debt holdings
HDFC 2007	15.10	6.05
IDBI 2009	10.31	4.13
IDBI 2007	10.04	4.02
Citifinancial Consumer Finance 2007	10.00	4.01

- Value Research

Returns in % as on September 22, 2005
 

Equity funds Average equity category returns (%)
	1 month	1 year
FMCG	4.60	85.62
Banking	2.02	71.65
Tax planning	1.39	66.61
Diversified	2.02	56.29
Auto	2.92	53.33
Index	4.96	44.74
Technology	2.59	43.01
Pharma	-3.66	32.24
Petroelum	3.35	18.30

 

Leaders Index funds
	1 month	1 year
Bank BeES	7.27	69.89
HDFC Index -Sensex Plus Plan	5.64	49.50
LIC MF Index -Sensex Ad. Plan	3.27	47.09
UTI Master Index Fund	6.05	46.87
LIC MF Index -Sensex Plan	4.64	46.10
SENSEX Prudential ICICI ETF	5.95	46.02
Tata Index Fund-Nifty Plan A	5.53	46.00
Prudential ICICI Index Fund	5.39	45.70
Franklin India Index - Sensex	6.06	45.39
HDFC Index Fund - Sensex	5.77	44.77

 

Laggards Index funds
	1 month	1 year
ING Vysya Nifty Plus Fund	4.35	37.47
PRINCIPAL Index Fund	4.78	38.44
LIC MF Index Fund - Nifty Plan	4.87	39.50
SBI Magnum Index Fund	4.71	40.24
Birla Index Fund	4.30	40.48
Nifty BeES	4.88	40.49
HDFC Index Fund - Nifty Plan	4.76	40.99
S&P CNX NIFTY UTI NDRS	4.24	41.30
UTI Nifty Fund	4.85	41.80
Franklin India Index - Nifty	4.91	44.00

Index funds made a surge to the top as far as monthly returns of equity fund categories are concerned.

Index funds returned 4.96 per cent for the month, followed by FMCG funds (4.60 per cent) and petroleum sector funds (3.35 per cent). Diversified category returns for the past month amounted to 2.02 per cent.

FMCG funds continued to top the returns table for the past 12-month period with 85.62 per cent. Petroleum funds came in last with 18.30 per cent.

Among index funds, Benchmark Mutual Fund's Bank BeES topped the category with an annual return of 69.89 per cent, followed by HDFC Index fund "� Sensex Plan Plus with 49.50 per cent.