Posted By:Infra Bazaar
Fund directors are adopting a stock-specific approach to deploy increasing inflows from investors. This method works in favour of large-sized companies that are placed better financially and operationally as compared with their mid-sized matches. Given this, funding in a concentrated portfolio of large companies makes sense.
In an outline where valuations are steep, earnings recovery is slow and private sector capex is taking time to pick up, investors believe a stock-specific approach will work better than a market-cap bias approach. Launched in 2000, DSP BlackRock Opportunities Fund, an outspoken multi-cap fund, follows a "go everywhere" strategy, with no pre-defined market capitalization limits while selecting stocks in the portfolio.
As the markets near lifetime highs, the fund manager Rohit Singhania has a higher allocation to large caps, with such stocks constituting 65-70% of the portfolio. The balance is spread across mid- and small-cap companies. The fund director identifies companies where profitability improvement translates into cash flows and gives a lot of weight to the quality of administration and before buying a stock, closely looks at past value generation for the companies managed by the promoter. Risks are contained by allocating a maximum weight of 10% to an individual stock. The project currently has 71 properties in its portfolio with the top 10 stocks accounting for 34% of the job. The fund manager is currently overweight industrials and infrastructure. In the infrastructure space, he has spread his bets by buying stocks across the construction, EPC, metals and cement spaces. The scheme is undersized IT as he expected slower incomes growth from the segment in the coming year.
In the past six months, the scheme's fund directors have added diversified companies in its portfolio, which are placed reasonably well in their respective sectors. A few leading companies among them are Hero MotoCorp, Housing Development Finance Corporation, Larsen & Toubro, Yes Bank, and Finolex Industries.