Has the market bottomed out? Currently there is no obvious answer to this question. Thus it is important that in such a situation, investors should rather be wary than being adventurous while investing. Thus, in the prevailing market condition, it would be more sensible to invest in the large-cap stocks that are less volatile than mid or small- cap stocks. Large-cap stocks in the current situation will not only help in containing the loss during the market fall but also act as a catalyst to outperform once the market begins to rally.DWS Alpha Equity has predominantly been a large-cap oriented fund since its inception. This might have helped the fund to put up a decent performance in the long-term. However, the fund in its early days had some hiccups but from 2006 onwards it has managed to beat its average category returns with ease and on a regular basis. The fund in the last three-year period has managed to outperform its category returns by 803 and 668 basis points.
In February 2009, the fund’s top three sectors were energy (24.09 per cent), FMCG (17.42 per cent) and telecom (9.41 per cent). Simultaneously, it has reduced weightage in sectors such as banking, capital goods, auto and IT. The fund had a compact portfolio of 22 stocks, wherein the top ten stocks contributed almost 55 per cent of the portfolio. The fund’s AUM has recorded a fall of almost 10 per cent over January and looking at the current market conditions, the fund manager seems to have become a bit conservative, thereby marginally increasing the cash holding.
However, the rise in portfolio on account of the stocks’ concentration is mitigated by the exposure towards the large-cap stocks that stood at more than 85 per cent of equity portfolio. Furthermore, the funds had a slightly defensive sectoral allocation with cash and equivalent holding of 16.57 per cent of the portfolio. Such tactical allocation makes this fund a good avenue for investors with a moderate risk appetite.
Ever since Aniket Inamdar took over this fund’s management in June 2007,
has managed to outperform the category returns with a huge margin and has been in the top league of the equity diversified category. At DWS, Aniket, who has been recently appointed as ClO, manages funds like Investment Opportunity, Tax Saving and MIP. While Investment Opportunity has been top performer, the other two funds have managed to put up an average performance over the long run.
Says Aniket: “We believe that uncertainties on many global issues and on some local issues like elections and the extent of earnings’ slowdown will start reducing gradually over the next few quarters. This should generally bode well for equities.” Looking at the fund’s performance as well as the fund manager’s aptitude, we suggest investors to take exposure to this fund through SIP
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