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Fund Manager Insight : Vinit Sambre, Fund Manager, DSP BlackRock Micro Cap Fund
April 28, 2015

Vinit Sambre answers our questions on DSP BlackRock Micro Cap Fund.


Author : iFAST Research Team



Untitled Document

 

"DSP BlackRock Micro Cap fund, one of the best performing mid & small cap funds on our platform sticks to its mandate of being a pure micro cap fund. We had a discussion with the Fund Manager, Vinit Sambre to know the strategy and the challenges that he faces while managing a micro cap fund."

 

Vinit Sambre

Vinit Sambre, Fund Manager - DSP BlackRock Micro Cap Fund

Q. As per the Investment Strategy of DSP BlackRock Micro Cap Fund, "The Investment Manager will use a disciplined quantitative analysis of financial operating statistics". Can you elaborate on this statement?

A. We use a bottom-up stock selection while managing the Micro Cap Fund. We pick companies which have high quality management, decent cash flows, strong ROCE, and companies having competitive advantage. We follow a buy and hold strategy. We also look at some cyclical businesses which are at the cusp of turnaround where ROCEs are slated to move up in the forseeable future.

Q. How will you differentiate a micro cap fund from a mid & small cap fund? What are the filters that you will use while selecting microcap stocks?

A. The mandate of the Micro Cap Fund is to invest minimum 65% of the assets in companies which are not part of the top 300 companies by market capitalization. Whereas, the mandate of Small & Mid Cap Fund is to invest minimum 65% of the assets in companies, which are not part of top 100 stocks by market capitalization.

As mentioned earlier the focus of Micro Cap is to identify strong businesses which we believe has the potential to outperform over the medium to long term. We focus on management quality, ROCE, cash flows etc. Also it is very important to eliminate ideas which do not meet some of these requirements.

Q. What are the challenges that you face while managing a micro cap fund?

A. Since many companies within this category is not well researched and well covered the information availability is poor. Hence our skill set of identifying the stock and understanding of the management becomes very important. Secondly the stocks are generally bought with long term horizon as low liquidity restricts regular churn. Hence we carry out detailed due diligence to mitigate these risks

Q. Going forward, which are the most favorable sectors that will add value to this fund?

A. The focus is really on individual stocks selection. Within a sector there can be big diversion in performance between different stocks. Hence the success depends upon the ability to identify the winners within each sector. Having said that we are positive on Consumer Discretionary, Healthcare, Financials and Industrials sectors with a long term horizon.

DISCLAIMER
iFAST and/or its content and research team's licensed representatives may own or have positions in the mutual funds of any of the Asset Management Company mentioned or referred to in the article, and may from time to time add or dispose of, or be materially interested in any such. This article is not to be construed as an offer or solicitation for the subscription, purchase or sale of any mutual fund. No investment decision should be taken without first viewing a mutual fund's offer document/scheme additional information/scheme information document. Any advice herein is made on a general basis and does not take into account the specific investment objectives of the specific person or group of persons. Investors should seek for professional investment, tax, and legal advice before making an investment or any other decision. Past performance and any forecast is not necessarily indicative of the future or likely performance of the mutual fund. The value of mutual funds and the income from them may fall as well as rise. Opinions expressed herein are subject to change without notice.
Mutual Fund investments are subject to market risks. Please read all scheme related documents carefully.

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