The year so far has been quite good for Indian equities, with bellwether Indices Sensex and Nifty touching new highs.

Interestingly, S&P BSE Sensex Index, a proxy for large-cap stocks, has delivered returns in excess of 15 per cent over the past year; S&P BSE Midcap Index and S&P BSE Small Cap Index have delivered in excess of 30 per cent during the same period.

While the outperformance of mid- and small-cap stocks during upswings is a given, the vulnerability of these stocks during corrective phases is equally high. One way to manage the downside risk in smaller stocks and benefit from the stability of large-cap stocks is by investing in a multi-cap scheme with a proven track record.

DSP BlackRock Opportunities is one such fund. Investors with a moderately high risk appetite can consider investing a portion of their surplus either through the SIP route or as lumpsum.

Since its inception in May 2000, the fund has managed to deliver healthy annualised return of over 19 per cent. And this is despite the fund’s expense ratio being higher at 2.54 per cent, compared to peers such as Birla Sun Life Advantage (2.26 per cent), Mirae India Opportunities (2.28 per cent) and Kotak Opportunities (2.16 per cent).

The fund has had a good track record of delivering benchmark beating returns on a consistent basis. In the last five years, the scheme’s returns have been higher than the benchmark, the Nifty 500 Index, 88 per cent of the time.

The fund has been able to make adept sector shifts in the past. For instance, after a modest show in 2014, it managed to improve its outperformance vis-à-vis benchmark. Stepping up exposure to financial stocks in 2014 helped improve performance.

Even in the past year, the fund reduced exposure to under-performing themes. For instance, over the last six months, it has pruned exposure to IT stocks. Likewise, the fund has also reduced holding in pharma stocks, which have been plagued by regulatory tightening and competition in the US, the largest market.

In the past, the scheme has been able to contain downsides well during market falls. For instance, during the January-September 2013 period, the fund contained downside at about 10 per cent compared to a nearly 13 per cent slide in the benchmark – Nifty 500 Index

The fund in the past has held over two thirds of its assets, at least, in large-cap stocks and this has helped it stay strong even during volatile phases. Currently over 85 per cent of the scheme’s assets are invested in stocks with market capitalisation of over ₹10,000 crore. This should hold the fund steady in the event of any correction. The fund currently bets big on financials with a skew towards private sector banks, which should be able to better manage concerns around asset quality. Oil and gas and metals are the other predominant themes. A cyclical slant should benefit the scheme’s medium to long-term performance, given that defensive themes such as IT and Pharma are currently big under-performers.

comment COMMENT NOW