Our analyst has assigned this 4-star fund a Silver rating. Around for over a decade, investors would be pleased with its long-term numbers. Its 10-year return as of date is a neat 20.75% annualised. Current fund manager Apoorva Shah took over the reins in July 2012. From July 2012 to July 2014, the fund (24% annualised) outperformed its peer group (21% annualised) and the benchmark (22% annualised).
Large-cap tilted
Though the fund mandate states that this is a diversified portfolio with a combination of large- and mid-cap stocks, this fund tilts towards large caps. The fund typically invests about 70-75% in large caps, the balance invested in good quality mid caps.
Portfolio construction
The aim of the fund is to adopt an opportunistic investment approach with aggressive sector and stock positions. The manager implements an unconstrained, benchmark-agnostic approach— the fund’s sector weights can deviate by a maximum of 15% (absolute) compared with the benchmark CNX 500’s weights. The strategy can often lead to concentration risk in a particular sector but the strong emphasis on portfolio construction and risk mitigation reduces the intrinsic risks here. For instance, individual stocks usually account for less than 5% of assets and the top 10 stocks account for roughly 35% of assets compared with 50% for a typical peer.
Investment strategy
The investment strategy has a predominant focus on growth-oriented stocks. The manager uses sector-based model portfolios created by analysts as his initial reference point and combines absolute and relative valuation measures to pick stocks. The fund manager also shows a value bias by investing a small portion of his portfolio in companies that trade at close to half their book value.
Although the manager is rooted to a bottom-up style, top-down factors are not entirely ignored as the macro-economic scenario and government policies, combined with industry/sector analysis, are used to identify and overweight sectors that demonstrate strong pricing power.
To read the analysis on DSP BlackRock Opportunities, click here.
