105989  |  INF740K01797  |  5 star  |  Silver

NAV

$ 57.69

1-Day Total Return

-0.72
%
INR | NAV as of 22/08/2017 09:30:00 | 1-Day Return as of 22 Aug 2017

TTM Yield

0.00%

Load

Multiple

Total Assets

59.7 bil

Expenses

2.50%

Fee Level

--

Turnover

15%

Status

Limited

Min. Inv.

1,000

30-Day SEC Yield

--

Category

Small/Mid-Cap

Investment Style

Small Growth
Author
Morningstar's Take | 30/09/2016
by Himanshu Srivastava

The fund is a good investment option for risk-taking investors.

The small/micro-cap segment of the Indian equity universe is a risky space in which to invest. Hence, research experience and good execution are of paramount importance for portfolio managers in this area. Vinit Sambre fills the bill on these counts. He is a competent analyst with reasonable portfolio management experience under his belt. He has managed this fund since June 2010. That he is backed by a high-calibre team also adds to our conviction.

Sambre plies a bottom-up, buy-and-hold approach to picking stocks, scouting for growth-oriented companies that have sustainable competitive advantages over their peers and are leaders in their industries. Although he is valuation-conscious, he believes that the companies in which he invests should command a premium given their leadership positions in their respective industries. We believe this focus on longer-term strength is a positive and helps reduce the issue-specific risks associated with a small-cap fund. Sambre also invests a portion of the portfolio in value stocks. We believe that this approach can help reduce price risk in the portfolio, given the inherent growth bias here. Cash calls are not a part of the strategy--this is a positive as it eliminates timing risk.

That said, small/micro-caps are tricky beasts and the risks of running such funds are magnified. For instance, Sambre may find it difficult to exit stocks when liquidity dries up--a common event in the small- and micro-cap space. Moreover, the fund’s exposure to value stocks may lead to potential value traps. A growing asset size can pose challenges in the form of market-impact cost and opportunity cost. But on a positive note, the fund house has restricted the subscription amount to INR 0.1 million per subscription. Nonetheless, Sambre so far has displayed an ability to contain downside risks in the portfolio. He appears at home with his investing style and has been fairly disciplined in his approach. In light of the above factors, we upgrade the fund’s Morningstar Analyst Rating to Silver from Bronze.

Morningstar Analyst Rating™
Analyst Rating
Portfolio Role

Sambre selects companies with sustainable competitive advantages and dominant market shares.

People

Vinit Sambre is an able analyst and an experienced manager, backed by a strong team.

Parent

We believe DSP BlackRock ranks among the best asset managers in the country.

Process

Sambre combines growth-styled quality stocks with value plays when constructing the portfolio.

Performance

Sambre has delivered satisfactory results over his tenure running this fund.

Price

The fund’s expense ratio is lower than the median of the India small/mid-cap category.

Important Disclosures

Unless stated otherwise, this report was prepared by the person(s) noted in their capacity as Manager Research Analysts (i.e., fund analysts) employed by Morningstar, Inc., or one of its affiliates. It has not been made available to the issuer prior to publication.

Analyst Ratings are subjective in nature and should not be used as the sole basis for investment decisions. Analyst Ratings are based on Manager Research Analysts’ expectations about future events and therefore involve unknown risks and uncertainties that may cause such expectations not to occur or to differ significantly from what was expected. Analyst Ratings are not guarantees nor should they be viewed as an assessment of a fund’s or the fund’s underlying securities’ creditworthiness.

No material interests are held by Morningstar or the Manager Research Analyst in the financial products that are the subject of the research reports or the product issuer. Regarding Morningstar’s conflicts of interest: 1) Manager Research Analysts’ compensation is derived from Morningstar’s overall earnings and consists of salary, bonus and in some cases restricted stock; however, Manager Research Analysts are neither allowed to participate directly or try to influence Morningstar’s investment management group’s business arrangements nor allow employees from the investment management group to participate or influence the analysis or opinion prepared by them. Further information on Morningstar’s Code of Ethics policies is available from http://corporate.morningstar.com/us/asp/subject.aspx?xmlfile=540.xml

Unless otherwise provided in a separate agreement, you may use this report only in the country in which its original distributor is based. The information contained herein is not represented or warranted to be accurate, correct, complete, or timely. This report is for information purposes only, and should not be considered a solicitation to buy or sell any security. Redistribution is prohibited without written permission.

For Recipients in India: Research on securities as defined in clause (h) of section 2 of the Securities Contracts (Regulation) Act, 1956 (“Investment Research”) is prepared by Morningstar Investment Adviser India Private Limited, which is registered with the Securities and Exchange Board of India. Your access to the Investment Research does not establish an advisory relationship with Morningstar Investment Adviser India. You should seek the advice of a financial professional before making an investment decision to ensure, among other things, that the security is suitable based on your particular needs and circumstances.

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