The Hindu Business Line : DWS Alpha Equity Fund: Hold

Investors can retain the units of DWS Alpha Equity Fund (DWS Alpha) given the fund’s ability to contain downsides and provide steady returns. Though, over three-year and five-year periods, the fund has managed to outperform its benchmark, Nifty, it has lagged the index over a one-year period.

Over a five-year period, DWS Alpha has delivered a compounded annual return of 26 per cent, which places it among the middle rung of diversified equity funds. DWS Alpha is a large-cap (market capitalisation greater than Rs 7500-crore) oriented stock .

The fund may be suitable for a conservative investor’s portfolio, but not as a core component as there are other large-cap funds with superior track record over the long-term. HDFC Top 200 Equity, DSPBR Top 100 Equity, Birla Sun Life Frontline equity and Sundaram Select Focus are some examples. But over a five-year period, DWS Alpha has managed to outperform funds such as HSBC Equity and Tata Select Equity.

Performance and Strategy: DWS Alpha has controlled downsides better than its benchmark on many occasions. During the market corrections in 2004, early 2007 and the prolonged fall in 2008-09, the fund has managed to limit losses better than the Nifty. But it failed to accomplish this in 2006.

But during periods of market upswing, the fund’s track record is not encouraging. During the rallies of 2006 and the present rally that started in March 2009, the fund has underperformed its benchmark. But it managed outperformance in the 2007 rally.

DWS Alpha takes concentrated exposures to stocks consistently. The fund’s top 10 stocks account for over 50 per cent of its portfolio. Despite this the fund has not delivered superior returns during market upswings. The number of stocks has been kept at around 30.

Over the last one year, the fund has increased exposures to sectors such as consumer non-durables and telecom which may be defensive bets. The fund also moved to cash, to the extent of nearly 20 per cent in March. This may have limited its ability to participate in the subsequent market rally. DWS Alpha’s August portfolio indicates that it is now nearly fully invested in stocks.

More Stories on : Mutual Funds | Mutual Funds | Recommendation

Article E-Mail :: Comment :: Syndication :: Printer Friendly Page

Stories in this Section
How to take profits on the core portfolio

Meghmani Organics: Buy

DWS Alpha Equity Fund: Hold

UTI Retirement Benefit Pension Plan: Invest

‘It’s easy to make money over the long term’ — Ajit Dayal

Tata Power: Buy

Mundra Port & SEZ: Buy

Chart Focus — Ansal Properties & Infrastructure (Rs 86.3): Buy

Peninsula Land: Buy

Index Outlook — Road-blocks ahead for Sensex