Date:26/03/2006 URL: http://www.thehindubusinessline.com/bline/iw/2006/03/26/stories/2006032600401000.htm

Back DSP ML Top 100 Equity: Invest

Shanthi Venkataraman

A strategy of being underweight in finance and healthcare sectors and overweight in capital goods explains its superior performance.

An investment can be considered in phases in DSPML Top 100 Equity. The fund has acquired a fairly good track record over the past three years since its launch. Funds, such as, Franklin Bluechip and HDFC Top 200 should still be the top choices for first-time investors in mutual funds. These funds have performed well during bear phases too.

Those who already own either of these funds can consider DSPML Top 100 as a diversification option. As the name implies, it seeks to invest in the top hundred stocks by market capitalisation. As this universe comprises mostly mature bluechip companies, such a fund could add stability to your equity portfolio.

Your funds can be channelled through a systematic investment plan to avoid risking a lumpsum amount to bad timing.

Performance: Launched in February 2003, DSPML Top 100 is well-placed to take advantage of the bull rally of the past three years. Its returns over this period have matched that of Franklin Bluechip. Over the past year, it has delivered returns of close to 70 per cent, well ahead of its benchmark index, the BSE-100, which returned 60 per cent. It has managed this even as it has focussed predominantly on stocks that comprise the index. A strategy of being underweight in finance and healthcare sectors and overweight in capital goods explains its superior performance to the benchmark.

But DSP Top 100 has also actively managed the fund, which has added value to investors. Had it held on to the stocks in its portfolio as on February 2005, it would have delivered a return of about 60 per cent. Instead it has delivered a significantly higher return, indicating good stock selection and trading choices.

Portfolio: With a small asset base of about Rs 90 crore, the fund has a fairly well-diversified portfolio of about 40 stocks. It, however, does take measured exposures to sectors, with the top three sectors — capital goods, software and auto — accounting for about 40 per cent of the assets.

Crompton Greaves, Container Corporation, Punj Lloyd, Suzlon Energy and Pantaloon Retail are stocks that have been picked outside of the BSE-100. These stocks, however, account for a mere five per cent of overall assets.