Manit
Goyal
DBS
Chola Opportunities Fund is an open ended equity
diversified fund with a primary objective 'to generate long
term capital appreciation from a portfolio of equity related securities."
It is an opportunities fund —
it does not have any investment bias or theme; it can hold a
portfolio of stocks from different economic sectors and market segments.
The
fund's asset allocation strategy is very aggressive - investment in
equity is expected to be at least 80
% of the corpus at all times. However, in the last two years,
the fund has taken too many cash calls. Though the average equity
allocation has been around 90%, there have been many months when the
fund has held higher cash levels.
This
strategy of taking cash calls is not always fruitful and its success
is dependent on fund manager's ability to time the market. Also,
by taking cash calls, the fund manager increases the opportunity cost
on the fund.
DBS
Chola Opportunities Fund's real advantage in the last six months has
been its diversified sectoral allocation.
It has maintained a portfolio of stocks from around
20-25 sectors, and the allocation to each sector has
been sizeable. Unlike other funds which have exposure to a larger
number of sectors but the allocation is
concentrated on the top five or seven, the DBS Chola fund's
sectoral allocation is much more diversified.
The
fund is bullish on banking (11.87%
of assets; the sector
has seen consistent allocation),
construction (13.69%; the sector
has seen a substantial increase in weights
in the last month), industrial
capital goods (7.60%;
there has been a drop in
allocation of late) and petroleum products
(7%).
The
other factor that has helped the scheme
outperform its peers has been the active management. The fund
manager has been churning the fund's corpus to an extent that, in the
last two years, no single stock
has found a consistent place in the portfolio. In spite of having
a relatively small corpus, the fund has not stuck to any particular
stock or theme and has at times
even taken exposure to Nifty futures.
The
fund has been around for more than 10 years and has generated around
14% compounded annu-alised returns,
less than the benchmark's 16% returns.
The
performance has improved significantly in the last three years. It gave
36.23% returns while the benchmark (BSE Sensex) and the category average
were at 32.96% and 34.82%, respectively
The returns in the last
year have been even more spectacular. The one-year returns of around
55.84% are better than the benchmark
(24.90%) and category average (34.03%).
The
better showing in the last one year was accompanied
by an increase in the volatility in returns. The fund
provides a well diversified risky investment opportunity,
but with high risk levels.
By
arrangement with
mutualfundsindia.com,
a
unit of Icra Online