We recently reviewed two marquee funds – HDFC Top 100 Fund and DSP Midcap Fund which have a long history. Both these funds are unique in their respective categories which are helmed by veteran fund managers.
Here is an analysis and brief overview of these funds.
DSP Midcap Fund
- Star Rating: 3 Stars
- Category: Midcap
- Analyst Rating: Silver (Regular Plan), Gold (Direct Plan)
- Fund Manager: Vinit Sambre, Resham Jain and Jay Kothari
- Inception: November 2006
- Return: 52.72% (1 year), 18.15% (3 year), 15.68% (5 year), 18.23% (10 year), 16.15% (since inception). Return of regular plan as on September 7, 2021
- Date of Analysis: August 2021
- Number of stocks: 49
- Assets in top 10 holdings: 33%
- Assets under management: Rs 13,457 crore (July 2021)
- Investment Style: Mid Growth
- Total Expense Ratio: 1.80% (regular), 0.86% (direct)
- Fund Overview
Vinit Sambre took the helm of this fund in July 2015 when Apoorva Shah moved to the fund house’s offshore division. He is a proficient analyst with 18 years of experience in equity research, particularly in the small/mid-cap space. Over the years, he has added significant value to several funds from the fund house through his stock picks from the mid- and small-cap segment.
Vinit Sambre combines absolute and relative valuation measures when picking stocks in the small/mid-cap space. He scouts for companies that have sustainable competitive advantages over their peers and dominant market shares in their industries. He also tracks company management decisions to see how they pan out. This is followed by meetings with the company’s management. Subsequently, he invests only when he is comfortable with the management’s assumptions, forecasts and its capabilities.
When Vinit Sambre took over the fund in July 2015, it was going through a rough patch. However, after taking over, he restructured the portfolio, which helped the fund’s performance come back on track. Under Sambre (July 2015 to July 2021), the fund has delivered a noteworthy performance. Its direct share class clocked an annualised return of 17%, thus outperforming its benchmark index (14%) and Morningstar Category average (15%).
HDFC Top 100 Fund
- Star Rating: 2 Stars
- Category: Large Cap
- Analyst Rating: Silver (Regular and Direct)
- Fund Manager: Prashant Jain and Sankalp Baid
- Inception: October 1996
- Return: 52.76% (1 year), 11.25% (3 year), 12.10% (5 year), 13.16% (10 year), 19.36% (since inception). Return of regular plan as on September 7, 2021
- Date of Analysis: June 2021
- Number of stocks: 53
- Assets in top 10 holdings: 54%
- Assets under management: Rs 19,957 crore (July 2021)
- Investment Style: Large Blend
- Total Expense Ratio: 1.85% (regular), 1.20% (direct)
- Fund Overview
Prashant Jain is an extremely skilled and experienced investor who has one of the longest track records in the Indian mutual fund industry.
Prashant Jain’s long-term investment approach, with a policy of staying fully invested and backing his convictions when the strategy is out of favour, has often delivered pleasing results over the long term. However, it has also led to the fund’s underperformance in 2013 and 2015, and again in 2019 and 2020. In fact, it had a good run until mid-2019 but performance tripped in the second half, which eventually dented its long-term track record. This could be attributed to Jain’s valuation-conscious approach being out of favour, and his investments in Public Sector Enterprises not yielding desired results. Additionally, his portfolio was aligned to benefit from economic turnaround, but contrary to the expectation, the Indian economy slowed down, which was aggravated during the COVID-19 pandemic in 2020. This year so far, the fund has delivered a top-quartile performance.
The process is robust, with research at its core. Prashant Jain adopts a hands-on approach, to get an in-depth understanding of the business and find firms with robust business models, clean balance sheets, and competitive strengths. Though the bottom-up style is clearly integral to his investment style, the top down isn’t ignored either. Both relative and absolute valuation methods are used to pick stocks. The investment style can be described broadly as growth at a reasonable price. For this fund, Jain is clearly mindful of the benchmark index, the IISL Nifty 100, as he targets having “matched stock positions” of at least 60%. He also doesn’t shy away from taking underweight/overweight positions at sector level when he sees opportunities.
