The Hindu Business Line : DSP Merrill Opportunities: Invest

EXPOSURES may be considered in DSP Merrill Lynch Opportunities Fund, as it appears well placed to repeat its impressive performance over the past five years. The fund's portfolio tilt and composition hold promise and this too strengthens the case for an investment in this fund.

Exposures may be routed through the systematic investment plan, as it will enable investors to capitalise on any weakness in the broad market. An investment using such a plan will have delivered 20 percentage points more than the benchmark Nifty on an annual basis over the past five years.

DSP Merrill Lynch Opportunities has been among the superior performers over the past five years, generating annual returns of about 35 per cent during this period. The NAV has risen about 55 per cent over the past 12 months. The fund has consistently outpaced its benchmark Nifty by a comfortable margin, as it has a host of peer funds.

The fund has adopted a fairly aggressive strategy of stock selection; its allocation to individual stocks is, however, less than 5 per cent, barring a few cases. A similar approach is evident in sector exposures also. What has happened over the past six months is a greater tilt towards large-cap stocks than six months ago.

The fund now has about 70 per cent of its assets in large-cap stocks; this was about 50 per cent in May.

A combination of a conscious tilt towards and graduation of a few mid-caps into large-cap status has led to this significant change in the portfolio composition.

This strategy has paid off, as large-cap stocks have been the dominant theme over the past few months. The fund has proved it can catch such market trends early.

Suitability: The fund has a well-diversified portfolio and risks are typically in line with what one would associate with equities.

The returns have more than handsomely compensated for the risk element.

DSP Merrill Opportunities should figure in the shortlist of preferred funds along with the likes of Franklin Prima, HDFC TaxSaver, HDFC Top 200, Magnum Contra and Reliance Growth. Invest with a three-to-five year perspective.

Portfolio overview: The preferred sectors now are IT, diversified plays, banking and engineering. The mid-cap exposures are Balrampur Chini, Balkrishna Industries, NDTV, Karur Vysya Bank, Graphite India and TASC Pharma.

The fund also has holdings in recent flotation such as Suzlon Energy, Sree Renuka Sugars, IL&FS Investsmart and Prithvi Information. The asset base of about Rs 725 crore should also provide for a high degree of flexibility in management and this is also a positive.

Fund facts: DSP Merrill Lynch Opportunities seeks to capitalise on the dynamically changing Indian economy by shifting exposures to themes such as lifestyle, pharmaceuticals, technology and cyclicals as trends change.

The fund was launched in March 2000.

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