DSP Equity & Bond Fund: Diversification, quality focus drive returns

Launched in May 1999, DSP Equity & Bond Fund featured in the top 30 percentile of the aggressive hybrid funds category of the CRISIL Mutual Fund Ranking (CMFR) for three consecutive quarters through June 2021. The fund has been managed by Atul Bhole, Vikram Chopra and Abhishek Ghosh since June 2016, July 2016, and January 2021, respectively.   The fund’s investment objective is to generate long-term capital appreciation and current income from a portfolio constituted of equity and equity-related securities, as well as fixed income securities (debt and money market securities). .....
Launched in May 1999, DSP Equity & Bond Fund featured in the top 30 percentile of the aggressive hybrid funds category of the CRISIL Mutual Fund Ranking (CMFR) for three consecutive quarters through June 2021. The fund has been managed by Atul Bhole, Vikram Chopra and Abhishek Ghosh since June 2016, July 2016, and January 2021, respectively.

 

The fund’s investment objective is to generate long-term capital appreciation and current income from a portfolio constituted of equity and equity-related securities, as well as fixed income securities (debt and money market securities).

Trailing returns

 

The fund has consistently outperformed the benchmark (CRISIL Hybrid 35+65-Aggressive Index) and its peers (funds ranked under the aggressive hybrid funds category in June 2021 CMFR) in all the trailing periods under analysis.

 

An investment of Rs 10,000 in the fund on April 1, 2002 (inception of the benchmark), would have grown to Rs 226,868 on July 28, 2021, at an annualised rate of 17.52 per cent, compared with the category and the benchmark, which would have grown to Rs 168,056 (15.71 per cent per annum) and Rs 128,726 (14.13 per cent per annum), respectively.

 

Systematic investment plan (SIP) is a disciplined mode of investing offered by mutual funds through which one can invest a certain amount at regular intervals. Monthly investment of Rs 10,000 over the past 10 years in the fund, totalling Rs 12 lakh, would have grown to Rs 26.15 lakh (14.92 per cent annualised returns), compared with Rs 24.07 lakh (13.37 per cent annualised returns) in the benchmark as on July 28, 2021.

 

Portfolio analysis

 

Over the past three years, the asset mix of the fund has comprised 73.82 per cent average allocation to equity and 26.18 per cent to debt. The equity portfolio has been diversified across market caps, with predominant exposure to large-cap stocks. Allocation to large-cap stocks averaged 50.78 per cent in the past three years, while allocation to mid-cap and small-cap stocks averaged 15.11 per cent and 7.93 per cent, respectively.

 

The equity portfolio was diversified across 27 sectors in the past three years. Banks had the highest average allocation of 15.52 per cent, followed by finance (11.98 per cent), consumer non-durables (5.77 per cent), software (5.28 per cent) and cement (4.77 per cent).

 

The fund had exposure to 114 stocks in the past three years, of which 18 were held consistently. ICICI Bank, Bajaj Finance, HDFC Bank, Divi’s Laboratories and UltraTech Cement have been the major contributors to the fund’s performance during this period and were also consistently held.

 

Over the past three years, the debt portfolio of the fund majorly comprised the highest rated (AAA/A1+) and sovereign securities. Exposure to AAA/A1+ rated securities averaged 9.64 per cent, while allocation to sovereign securities averaged 8.22 per cent. Allocation to AA+/AA/AA- rated securities averaged 6.06 per cent, while allocation to A and below rated securities averaged 0.13 per cent. The fund did not take exposure to securities rated A and below in the past year.        

 

CRISIL Research



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