Wednesday, May 19, 2010

DSP BLACKROCK FOCUS 25 FUND - DOUBLE EDGED SWORD???






FOCUSSING ON 'ALPHA'

FOCUSSING ON “ALPHA”

DSP BLACKROCK has come with a New Fund Offer (other than the FOFs) after nearly 4 years. And it has come out with a Exciting Fund called DSP BlackRock Focus 25 Fund.

Unlike DSPBR Top 100 Fund which is restricted top 100 companies by Market Cap., this Fund has the entire gamut of stocks to choose from and thus could provide an Alpha.

The Fund aims to invest the core of the portfolio in Large Caps and balance in multi caps in the Top 200 market cap companies. The Fund Manager has indicated that he intends to have largest exposure to Banking and Financial services as the outlook appears bright for the sector.

The new DSP Blackrock Focus 25 Fund aims to distill the best of the fund house's stock picks in a concentrated portfolio of high conviction bets.

And yes, being a concentrated portfolio, the Fund will have a potentially higher risk/return profile than a diversified fund.

Surprisingly, the Fund has chosen SENSEX as its Benchmark, whereas BSE200 would have been more appropriate.



The fund will be managed by Apoorva Shah who also manages two 5 Star Rated Fund, namely DSP BlackRock Equity Fund and DSPBR Top 100 Fund which has been a very consistent performer. A clear reflection of the stock picking ability of the Fund Manager.

The fund is positioned in between a pure thematic fund and a diversified fund.

It is a known fact that concentrated portfolio mutual fund schemes often produce outstanding results. These funds tend to raise and fall more than the market and other diversified equity funds.

RECOMMENDATION :

While on the face of it, the Fund looks to be a Double Edged Sword, the pedigree of the fund house gives comfort.

First Time Investors., this Fund is NOT for you. You have better options available.

Investors with reasonable risk appetite could look at taking a bet in this Fund. The fund has potential for high returns, albeit with high volatality due to its limited diversification and should be avoided by conservative investors. Investing through SIP is highly recommended to get advantage of the high volatility this Fund is expected to have. Avoid Lumpsum investment., unless you are following it up with SIP.

Ideal for long term rather than short term.







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http://equityadvise.blogspot.com

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