DSP Merrill Lynch has prudently floated three different schemes within the monthly income plan (MIP) ategory to cater to the varying risk-return combination.
Lahar Bhasin
DSP Merrill Lynch has prudently floated three different schemes within the monthly income plan (MIP) ategory to cater to the varying risk-return combination within the MIP category.
DSPML Savings Plus - Aggressive, as the name suggests, falls in the higher equity bracket, with the mandate of investing in the top 100 companies by way of market capitalisation. The fund’s average equity exposure over the past 18 months has been 20.4%.
With the severe correction in equities over January 2008, it is no wonder that over the one month period ending January 31, 2008, the fund ended at the bottom of the category.
Also look at the fund’s past track record during downslides reaffirms its inconsistent performance. For instance, during the quarter ended March 2007, the fund managed to outperform its benchmark by delivering an absolute return of 1.11% at a time when the Index fell by -0.6%. However, during the quarter ended June 2006, the fund returned -0.71% as against its benchmark’s marginal loss of -0.1%.
A closer look reveals that the fund managers made an accurate cash call during the March 2007 quarter, as during February and March 2007 the fund held only 6.45% and 7.45% of assets in equity. However, despite of this initial push, the fund didn’t manage to extend gains.
Stretching the period we find that the fund’s performance over the 2-year and 3-year period has not been as disappointing, with the fund managing to deliver at least average returns.
But then again, given its aggressive tag, we would expect a much better performance. Surprisingly, contrary to this performance the fund has seen an increase in its asset base. This comes at a time when most MIP funds find it difficult to retain investors.
On the debt front, the fund doesn’t look very aggressive. Its average maturity over 2007 was just short of one year, well under the average maintained by its peer group. Conservative investors would be better off giving this fund a miss. While the fund has a higher upside potential owing to its mandate, its performance over bull rallies has not lived up to expectations.
By arrangement with mutualfundsindia.com, a unit of Icra Online
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
)
){kind=small}
){kind=small}
)
)
)
)
)
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}