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Fund Pick: DSP BlackRock Focus 25

Sharper focus reaping good returns

Business Standard 

Fund Pick: DSP BlackRock Focus 25

Launched in June 2010, Fund is classified under the large-cap equity schemes of Mutual Fund Ranking. It has featured in the top 30 percentile (Fund Rank 1 or 2) in the past four consecutive quarters ended March 2017. The fund's quarterly average assets under management (AUM) tallied at Rs 2,082 crore in March 2017 under the able guidance of Harish Zaveri and Jay Kothari.

The fund aims to generate long-term capital growth from a portfolio of equity and equity-related securities including equity derivatives. The portfolio largely consists of companies from the top 200 by market capitalisation. The portfolio limits exposure to companies beyond the top 200 companies by market cap up to 20 per cent of the net asset value. The fund holds equity and equity-related securities, including equity derivatives, of up to 25 companies. Further, it has at least 95 per cent of the invested amount (excluding investments in debt securities, money market securities and cash and cash equivalents) across the top 25 holdings in the portfolio. It also invests in debt and money market securities for defensive considerations and/or for managing liquidity requirements.

Consistent outperformance

In the past five years, the fund outperformed the benchmark (S&P BSE 200) and its category (funds ranked under the category large-cap equity schemes in March 2017 Mutual Fund Ranking) across all time frames under analysis. 

The fund underperformed during the first two market phases after its launch, post subprime crisis and European crisis. However, it bettered the benchmark and the category during all the subsequent market phases. After the European crisis (July 2013 to February 2015), the fund generated 41.08 per cent annualised returns compared to the category's 36.54 per cent and the benchmark's 31.21 per cent. The fund continued to perform well and outperformed the benchmark and category during recent rally.

An investment of Rs 1,000 in the fund on June 10, 2010 (inception of the fund) would have grown to Rs 2,095 on May 12, 2017 at an annualised rate of 11.27 per cent, surpassing the benchmark, which would have grown to Rs 1,913 (9.82 per cent).

Rs 1,000 invested per month in the fund since inception via systematic investment plan (SIP), totalling Rs 84,000, would have grown to Rs 1.43 lakh by May 12, 2017 at 15.07 per cent annualised returns. A similar amount invested in the benchmark would have paid Rs 1.29 lakh at 12.28 per cent.

Portfolio analysis

As of March 2017, the fund's portfolio composed of 28 stocks from 13 sectors.

In the past three years, owing to the fund's investment objective, it did not have exposure to more than 28 stocks across 23 sectors at any given point.

During this period, the top five sectors, on average, constituted 67 per cent of the portfolio, which indicates substantial sectoral concentration. The fund had highest exposure to banking (25.97 per cent) followed by auto (17.51 per cent), petroleum products (7.17 per cent), software (6.73 per cent) and pharmaceuticals (6.51 per cent). 
Fund, chart
Banking, petroleum and auto sectors, in which the fund is overweight compared to the benchmark, have been among the highest contributors to the fund's performance. Despite relatively lower weightage, the finance sector (owing to robust returns) emerged amongst the top contributors to the funds' performance.

The fund has consistently held five stocks for the past three years from its investment universe of 72 stocks, which suggests the fund manager deploys active churn. Top holdings among the consistently held stocks include HDFC Bank, Maruti Suzuki and Tata Motors. It is noteworthy that all consistently held stocks have outpaced the respective sectoral benchmarks in the past three years.