DSPBR EQUITY
The fund’s first five years were a bumpy ride, but since 2003, consistency has been its trump card. Consequently, it now boasts an impressive record of steadily outperforming the category average.
When Apoorva Shah took over the fund, he looked at a 50 per cent allocation to large-caps, the balance being in mid- and small-caps. Once he began to handle DSPBR Mid & Small Cap, he combined two individual portfolios (DSPBR Top 100 and DSPBR Mid & Small Cap) to construct this fund.
This strategy resulted in a rigorously diversified offering. Under Shah’s management, single stock allocation has never crossed five per cent, barring a few large-caps. Of the 79 stocks in its portfolio, 38 have an allocation of less than one per cent. Though such diversification does raise questions, Shah is of the opinion that the market has a lot of breadth; hence, he wants to capture different segments of the broad economy. Shah actively churns his portfolio but claims to do so mainly on the large-cap side of the portfolio and adopts a more or less buy-and-hold strategy for the smaller fare.
Shah handled the market rally in 2007 and the market crash of 2008 very well. But when the market began to rise from March 9, 2009, onwards, he was caught unaware. It took him a while to lower cash allocation and neither was he heavy on construction, metals or financials, which boomed during that time. As a result, the fund lagged. Once he repositioned his portfolio to look at growth, he delivered and outperformed the category average yet again in 2009.
| Period | Return (%) |
| 3-month | 14.43 |
| 6-month | 24.01 |
| 1-year | 37.95 |
| 3-year | 12.56 |
| 5-year | 27.84 |
HDFC EQUITY
This fund is one of the sturdiest one. After an impressive show in 2005, it delivered a pretty muted performance in 2006 and 2007. But that also brought to the fore the fund manager, Prashant Jain’s, inherent strength, that of sticking by his convictions. So, even if it means being temporarily punished, he will stick to good-quality businesses, remain diversified and be wary of richly valued investments.
If investors fretted over and critics scorned the fund’s performance in 2007, Jain turned the tables on them eventually. Known to always provide decent downside protection capabilities in the past, it was the same in 2008. Though its fall of 50 per cent was only marginally lower than that of the category average (53 per cent), Jain accomplished this without plunging into large-caps or resorting to aggressive cash calls.
And, being fully invested certainly helped when the markets picked up in March 2009. Last year, the return of 106 per cent put it way ahead of the category average of multi-cap funds and its benchmark (S&P CNX 500) by 24 per cent and 17 per cent, respectively.
| Period | Return (%) |
| 3-month | 17.76 |
| 6-month | 30.73 |
| 1-year | 42.81 |
| 3-year | 16.06 |
| 5-year | 27.64 |
Over the past few years, the fund has preferred bank stocks over cyclicals like metals, as return on equity/growth are better on the one hand and valuations cheaper on the other for the former. This hurt performance in 2008, as banks under-performed due to global banks being in stress and the same has helped in 2009 when banks did well. The high mid- and small-cap exposure also helped, though Jain has booked profits and is now tilting towards large caps.
The fund’s size has not dampened performance, though it has led to a much more diversified offering. With less than 20 stocks in the portfolio till 2003, it has risen to around 60.
QUANTUM LONG TERM EQUITY
If you are looking for a fund truly adhering to a buy-and-hold strategy, this one fits the bill. With a small corpus, it would not be surprising to see the fund manager dabble in smaller stocks, churn his portfolio rapidly or take concentrated bets. Contrary to expectations, that is not the case. The fund started as a large-cap offering, changed its complexion and is now again predominantly in large-caps. It is also one of the funds with the least amount of churn. Till date, just 54 stocks have appeared in the fund's portfolio and of these, only eight have been held for five months or less. What you will find here is a value-based, well-diversified, liquid portfolio.
Fund manager Atul Kumar is completely sector and market-cap agnostic. He opts for bottom-up stock picking and closely looks at the daily average trading of his stocks. The fund follows a very process-driven strategy. Buy and sell limits are set for each stock. Only stocks that fall within the pre-determined purchase price are picked up. Once a sell limit is reached, the team re-evaluates the target and if they do not find value in holding on at that price, they exit the stock.
The fund's style means it can lag its peers when speculative growth stocks rule the roost. In 2007, the fund lagged the category average with a return of just 46 per cent. But come 2008, this very exposure was its saving grace.
Not only has this fund rewarded its investors over the long term, it is even one of the cheapest ones available in terms of a low expense ratio.
| Period | Return (%) |
| 3-month | 15.91 |
| 6-month | 26.19 |
| 1-year | 41.83 |
| 3-year | 16.58 |
| 5-year |
- |
| Holding Related Data as on 31st October 2010 Trailing Returns as on 10th November 2010 | |
