Fund Pick: DSP BlackRock Micro Cap Fund

Small in size, big in returns

The DSP BlackRock Micro Cap Fund has been ranked in the top 30 percentile (CRISIL Fund Rank 1 or 2) since December 2013. The scheme seeks to generate long-term capital appreciation from a portfolio that is substantially constituted of equity and equity-related securities, which are not part of the top 300 companies by market capitalisation. Managed by Vinit Sambre and Jay Kothari, the fund’s quarterly average asset under management stood at Rs 2,099 crore as on September 30.

The fund has consistently outperformed its benchmark (S&P BSE Small Cap) and the category, across all timeframes. Over the past year, the fund has performed well in a volatile environment where the benchmark posted negative returns.

The fund has significantly outperformed its category and benchmark during the “post crisis” phase. However, during the sub-prime and European crises, the fund underperformed its category.

Thus, Rs 1,000 invested in the fund since inception (June 14, 2007) would have grown to around Rs 4,128 (compounded annualised return of 18.34 per cent) as on November 13. A similar investment in the category and benchmark would have grown to around Rs 3,269 (15.1 per cent) and Rs 1,519 (5.09 per cent), respectively.

A monthly systematic investment plan (SIP) of Rs 1,000 over seven years (on a principal of Rs 84,000) would grow to around Rs 2.41 lakh, delivering an annualised return of 30.09 per cent. Similar investment in the benchmark would have grown to around Rs 1.31 lakh (12.83 per cent).

The fund’s performance on a risk-adjusted basis is in line with its category; its sharpe ratio is 1.29 vis-à-vis the category’s (1.27) and the benchmark’s (0.36), over last three years ended November 13.

The fund has consistently held 13 stocks over the last three years, with Indoco Remedies, Solar Industries India, and NIIT Technologies among the top holdings.

At a sectoral level, the fund has high exposure to pharmaceuticals, finance, textile products, banks and industrial capital goods. Pharma, finance, banks and industrial capital goods have delivered returns of 27.43 per cent (as represented by the Nifty Pharma Index), 14.28 pre cent (as represented by the Nifty Financial Services Index), 14.88 per cent (as represented by Nifty Bank Index), and 10.45 per cent (as represented by S&P BSE Capital Goods), respectively, compared with the benchmark’s 16.22 per cent.