DSP BlackRock Small and Mid Cap Fund - Rating & Review - Invest through SIP

DSP BlackRock Small and Mid Cap Fund – Rating & Review – Invest through SIP

Roboadviso     Mutual Funds Rating     Posted On, Fri 9th June, 2017     1 comment
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DSP BlackRock Small and Mid Cap Mutual Fund

DSP BlackRock Small and Mid Cap Fund is a scheme which aims for creation of capital growth in the long term via investment in a portfolio that is primarily made up of equity and equity linked securities that do not fall into the category of the top 100 stocks via way of market capitalization.

The investments of the fund are in companies with great potential for growth as they tend to operate on a smaller scale or base. The fund manager may also periodically seek investments in other kinds of equity and equity linked instruments so as to optimize the makeup of the portfolio.

Presented below is a detailed review of this fund which will provide you with all the necessary information that you require so as to make an informed choice about whether to sell, buy, or hold this fund.

Basic costs and other information

DSP Small and Mid Cap Fund was launched on November 14, 2006. It has thus been in the market for more than a decade. As of 30th April 2017, this equity and equity related fund has assets of INR 3,804 crores.

The minimum required investment through the systematic investment planning (SIP) method is INR 500, while it is INR 1000 if the lump sum route is chosen.  The expense ratio as of 30th April 2017 is 2.52 percent. If investors redeem the fund investment within a period of 364 days of holding it, then the exit load is 1%.

Vinit Sambre has been the fund manager since July 2012. He is a B.Com graduate and an FCA who has worked for DSP Merrill Lynch Ltd., IL & FS Investsmart Ltd., Unit Trust of India Investment Advisory Services Ltd., Kisan Ratilal Choksey Shares and Securities Pvt. Ltd., and Credit Rating Information Service of India Ltd., before joining DSP BlackRock in 2012. Sambre thus has experience of over 15 years in the industry. Some of the other funds that he has successfully managed, or is currently managing, include DSP BlackRock Micro Cap Fund – Regular Plan and DSP BlackRock 3 Years Close Ended Equity Fund – Regular Plan.

Allocation of the fund

As of 28 April 2017, the fund’s allocation stands as 92.27 percent in equities, 7.71% in Cash/Call, and 0.02% in others. The portfolio is focused on investments in mid-cap stocks; it has 71.8 percent asset investment in mid-caps and 26.82 percent in small-caps.

As of 28 April 2017, the top 6 sectors that the fund’s portfolio focuses on include Banking/Finance (20.27%), Manufacturing (16.96%), Chemicals (12.26%), Engineering (8.67%), Pharmaceuticals (6.74%), and Automotive (6.26%).

As of 28 April 2017, the top 6 stocks that make up the fund portfolio include Federal Bank (4.28%), Techno Electric & Engg (3.82%), Ashok Leyland (2.97%), SRF (2.86%), Exide Inds. (2.80%), and Atul (2.67%).

Performance

As of 28 April 2017, DSP Small and Mid Cap Fund has produced a 16.55 percent return per annum on investment in the last 10-year period. It indicates that the fund beat its ‘Nifty Free Float Midcap 100’ benchmark of 12.05 percent for this period as well as outpaced the category average of 13.66 percent return per annum. From the time of launch the fund has delivered 16.90 percent per annum returns.

In the past 1, 3, and 5 years, the fund has shown 37.46, 25.47, and 26.63 percent returns per annum. Thus the 3-year returns of the fund are over 3% points as compared to category returns and more than 5% points over the benchmark returns. On a 5-year period, the outperformance margins of the fund vis-à-vis category and benchmark are 1 and 5 percent respectively.

Analysis

If the topmost holdings are taken into consideration, then it can be said that the DSP Small and Mid Cap Fund heavily leans towards the banking/finance and manufacturing sectors. As per data of the past 3 years, the fund’s standard deviation, i.e., the volatility of the returns of the fund vis-à-vis its average, is 18.57% as of 31st May 2017. This is relatively higher than the category average which is 15.95% for the same period.  

When the returns of DSP Small and Mid Cap Fund are compared against its peers during the past 5 year period, then at 26.63 percent per annum returns it gets outperformed by similar funds like Canara Robeco Emerging Equities Fund – Regular Plan (30.92%), HDFC Mid-Cap Opportunities Fund (27.74%), Kotak Emerging Equity Scheme Regular Plan (27.73%), and SBI Magnum Midcap Fund (29.95%). When looking at the fund’s returns from a 3-year perspective, the other funds in the category have slightly better or slightly reduced returns than DSP Small and Mid Cap Fund returns of 25.47% per annum.

The mid-caps bias of DSP Small and Mid Cap Fund is its most advantageous feature. This is because small and mid-size stocks tend to show huge returns when they become large cap stocks. Since the time of its launch, this fund has always been in the top of the category and provided consistent earnings growth. It is a good fund for wealth creation, lifestyle wants, and other short-term requirements. Investors should invest through SIP in this fund for its positive outlook and inherent potential of growth.

Should I sell, buy, or hold?

The consistent and solid performance of DSP Small and Mid Cap Fund over a period of many years along with a good Fund Manager and Fund House means that it gains our approval. Our suggestion to all investors is – “Buy through SIP”

Pros

Excellent Performance
Excellent Consistency
Excellent Fund Manager
Excellent Fund Size
Excellent Fund House

Cons

High Expense Ratio

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