Fund Update:DSP Small Cap Fund Now Open for Subscription (via SIP/STP)
DSP Investment Managers have re-opened subscription into the DSP Small Cap Fund (erstwhile DSP BlackRock Micro Cap Fund) via the SIP or the STP routes from September 3, 2018 onwards. Initially, in October 2014, the fund house had restricted flows into the fund to the tune of INR 2 lakh per investor as it felt that additional inflows may prove detrimental to existing investors. Later in August 2016, it further restricted inflows to INR 1 lakh per investor, and finally in February 2017, fresh inflows into the fund were completely stopped.
The DSP Small Cap Fund was launched in June 2007 and is managed by Vinit Sambre who has been the Fund Manager since June 2010. This fund has been one of our Recommended Small Cap Funds since 2015 and has continued its good innings in the current list as well.
We recommended DSP BlackRock Micro Cap Fund in 2015 after a long gap of 4 years when it was first recommended on our platform. Our comments at the time were thus:
“A fund that has made a comeback into our list this year is the DSP BlackRock Micro Cap Fund, which made an entry into our recommended funds list for the first time in June 2010. However, we had removed this fund from our recommended list in 2011 as we felt that the analysis on the same has been skewed as the fund became an open-ended fund only on June 25, 2010. The fund has completed 4 years in the open-ended category and as per the current model, it has turned out to be one of the best performing funds in the mid and small cap category. This is a fund that stays true to its label of being a micro cap fund. As the fund manager feels that an increasing corpus will not allow him to manage the fund as per the given mandate, lumpsum investments of more than INR 2 lakh per transaction in the fund have been stopped. As for our investors, we would advise them to take the SIP route for investments into this fund.”
A quick glance at the portfolio shows that ~35 stocks have been held continuously over the last 36 months (August 2015 to July 2018). In the same period, the total number of stocks has increased from 56 to 86. This is a clear indication that Sambre has been actively managing the portfolio to create alpha for investors. It is also interesting to note here that the two favourite sectoral picks during the last 36 months have been Textiles and Chemicals.
Sambre is placing his bets on a few themes like the affordable housing project of GOI, rural income and spending, rising aspirations of urban India, positive impact of GST on the formal economy, and the increasing domestic demand in the automobile sector.
What we like about this fund is not just the consistent performance it has delivered across time periods, but the fact that it has remained true to its label of being a micro/small cap fund across the different market cycles. We continue to place our faith in Sambre’s stock picking ability, which is purely based on his macroeconomic or thematic convictions and not impacted by the ups and downs of the market.
With the fund now open for subscription, our moderately aggressive/aggressive investors should take some exposure into it. However, it is recommended specifically to those investors who are willing to take the risk that is associated with such a fund. Also, the time horizon for investment should definitely be more than 5 years and investors should not think of exiting the fund even if it gives superlative performance in a shorter period of time.