Diversified Portfolio Is A Conscious Decision

Anup Maheshwari, Fund manager, DSP Merrill Lynch Opportunities Fund

The portfolio of DSP Opportunities Fund looks similar to a diversified fund. In light of this, could you explain the essence of DSP Opportunities Fund?

The idea behind setting up DSP Opportunities Fund is to benefit from price increases in specific sectors of the economy. However, in the last few months, we have seen a broad-based rally in the markets. As a result, we have taken a conscious decision to diversify our portfolio.

The risks associated with concentrating assets in a particular sector pays only when the sector promises a sharp trend upwards. But this has not been the case lately. We will move to a few particular sectors, once we are satisfied that there will be considerable price appreciation in it.

Public sector banks, especially the State Bank of India (SBI), form a very large proportion of your fund portfolio holding. With no major announcement for public sector banks in the Budget, would it make sense to hold on to these stocks?

We bought into the SBI at much lower levels. Therefore, we have not suffered losses on account of the decline in prices. We continue to remain bullish on banking stocks, especially since the government has proposed to buy illiquid high-yield government securities (G-secs) at a premium from public sector banks which could significantly improve the asset quality of large banks. This is one of the primary reasons for our bullish outlook on public sector banks such as SBI.

Are your investments in public sector stocks a pure disinvestment play?

Disinvestment forms the basis for investment only when it is certain that the stocks will be disinvested. For instance, we have invested in Hindustan Petroleum (HPCL) as the company is expected to benefit immensely from disinvestment. But the investments in other public sector stocks are purely based on fundamentals and a favourable risk-reward ratio. For instance, we have invested in BHEL and BPCL because we believe that these stocks are attractively valued.