An update on DSP BlackRock funds

By Morningstar Analysts |  12-04-17 | 
 

DSP BlackRock Small and Mid Cap

  • Scheme: Regular
  • Option: Growth
  • Category: Small/Mid Cap
  • Style: Mid Growth. The portfolio is a combination of growth-styled quality stocks with value plays.

Read the analysis here

DSP BlackRock Micro Cap

  • Scheme: Regular
  • Option: Growth
  • Category: Small/Mid Cap
  • Style: Small Growth. The portfolio is a combination of growth-styled quality stocks with value plays.

Read the analysis here

Why DSP BR Micro Cap and DSP BR Small and Mid Cap get a Silver

Small and Mid Cap underperformed the category average for three consecutive calendar years before putting up a good show in 2016. Micro Cap on the other hand has been putting up a stellar performance.

Both the funds are managed by Vinit Sambre, a proficient analyst with 15 years of experience in research, particularly in the small/mid-cap space. Sambre is a capable manager and  appears at home with his investing style and fairly disciplined approach. Under him, both funds have the wherewithal to outperform its benchmark index and category peers over the long term.

DSP BlackRock T.I.G.E.R

  • Scheme: Regular
  • Option: Growth
  • Category: Sector - Infrastructure
  • Style: Large Blend. The fund manager largely plies a bottom-up approach, combining growth and value styles of investing.

Read the analysis here.

Why DSP BR T.I.G.E.R was upgraded from Neutral to Bronze

During its decade-long history, the fund has seen various fund managers at the helm – Soumendra Nath Lahiri, Anup Maheswari, Apoorva Shah and Rohit Singhania, the current lead manager of this fund who has been with the fund house for over a decade.

Singhania gives consideration to the top-down approach; he pays heed to the macroeconomic scenario to study the interest rate cycle and plays the economic reforms theme by scouting for issues where government deregulation can improve a sector's prospects. He then narrows down his focus to sectors and sub- sectors.

Within the infrastructure category, T.I.G.E.R. is a sound offering though its returns are not shooting out the lights. In 2012, its performance was good, only to underperform the category average the next two years but bounce back in 2015. This year it is once again ahead of the average.

The fund was earlier a part of the flexi-cap Morningstar Category, where its restrictive investment mandate failed to deliver desired results vis-à-vis its more flexible peers. Hence we gave it a Morningstar Analyst Rating of Neutral. However, now it is a part of Morningstar’s newly created Sector-Infrastructure category. When compared with similar offerings, it makes a compelling investment option for investors seeking to benefit from the growth in the infrastructure sector. Further, with an experienced manager at the helm, the fund merits a rating upgrade to Bronze from Neutral.

DSP BlackRock Equity

  • Scheme: Regular
  • Option: Dividend
  • Category: Flexi Cap
  • Style: Large Growth. Large cap stocks generally dominate the portfolio. The fund adopts a growth-oriented investment approach.

Why DSP BR Equity has been downgraded from Gold to Neutral

The fund’s track record under Apoorva Shah was stellar. Between June 2006 and July 2015, the fund delivered an annualised return of 13%, outperforming its benchmark index (8%) and category average (12%). After Shah relinquished his management responsibilities, it was jointly managed by Harish Zaveri and Vinit Sambre.

Current fund manager Atul Bhole took over in June 2016. Last year the fund underperformed the category average but has picked up this year. The funds managed by Bhole during his earlier stint in Tata Mutual Fund have a decent track record.

However, this fund does not have a long-term track record under him and one cannot draw any  meaningful conclusions in a short time frame.

Consequently, we are downgrading the fund’s rating until we gain more conviction in Bhole’s investment skills, execution capabilities with regards to the investment strategy, and ability to deliver outperformance within the flexi-cap category over the long term.

Read the analysis here

DSP BlackRock Top 100 Equity

  • Scheme: Regular
  • Option: Growth
  • Category: Large Cap
  • Style: Large Growth. You will find a true blue large-cap portfolio here with a growth-oriented bottom-up strategy at play.

Why DSP BR Top 100 has been downgraded from Gold to Bronze

Harish Zaveri took over the fund in July 2015 from Apoorva Shah. The start was not great as the fund featured in the category’s third performance quartile in 2015, with stocks such as SBI and Larsen & Toubro pulling its performance down. However, the fund got back on its feet the next year with the help of stocks such as HDFC Bank and Maruti Suzuki.

The fund’s performance under Shah (April 2006 to June 2015) was noteworthy – outperforming 86% of the competition. But Zaveri shows promise. He has over two decades of research experience across various sectors and displays the potential to make this fund an outperformer. Hence, though downgraded, the fund still deserves a positive rating - Bronze.

Read the analysis here

DSP BlackRock Opportunities

  • Scheme: Regular
  • Option: Growth
  • Category: Large Cap
  • Style: Large Growth. The manager adopts an unconstrained and unbiased approach while constructing the portfolio. A growth-oriented bottom-up strategy is at play.

Read the analysis here  

DSP BlackRock Tax Saver

  • Scheme: Regular
  • Option: Growth
  • Category: ELSS
  • Style: Large Growth. The manager adopts an unconstrained and unbiased approach while constructing the portfolio. A growth-oriented bottom-up strategy is at play.

Read the analysis here

Why DSP BR Opportunities and DSP BR Tax Saver have been downgraded from Silver to Neutral

Both funds were initially managed by Anup Maheshwari, followed by Apoorva Shah. The current fund manager  Rohit Singhania took over mid 2015.

In both funds, Singhania implements an unconstrained, benchmark-agnostic approach without any bias towards a stock or sector while constructing the portfolio. He churns the portfolio frequently to capitalise on the investment opportunities arising in the interim and will increase or reduce allocations swiftly in response to rising and falling stock prices. Additionally, he believes in buying and selling huge amounts to make a meaningful difference in the portfolio.

While Singhania has extensive research experience with a sound and well researched investment thesis, as a lead manager for this fund, we would like to see how his investment decisions translate into performance over the long haul. In the short period that he has run the funds, he has impressed. The performance of DSP BR Opportunities has been stark - amongst the top 5 performers in its category over the last 2 calendar years.

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