DSP BlackRock Small and Mid Cap Fund is a mutual fund investment scheme that focuses on generating long term capital appreciation for its investors with the help of a portfolio that is primarily comprised of equity and equity linked securities that do not fall into the category of the top 100 stocks by market capitalization. An open ended equity growth scheme, this mutual fund investment is a great choice for investors who subscribe to the high-risk/high-return investment philosophy. Launched in November 2006, this scheme tends to invest in mid and small-cap companies that showcase enormous growth potential along with sustainable competitive advantages.
If an investor opts to go down the SIP investment route, then the minimum required investment is Rs. 500. This fund is currently under the management of experienced portfolio manager Vinit Sambre since July 2015. Formerly, Mr. Sambre used to co-manage this fund with veteran manager Apoorva Shah between 2012-2015. Mr. Shah who managed the fund commendably between 2008 to 2015 gave up his management responsibilities and moved on to the fund house’s offshore division. However, it must be said that Mr. Sambre, who boasts of an experience of over 15 years in the industry, has performed a stellar job since he took on independent responsibility. Moreover, he’s also backed by a solid team who have ensured consistent and solid performance in this mutual fund investment since a long time now.
Mr. Sambre is known to pick organizations with consistent competitive advantages and dominant market shares. Being a more than capable analyst and an experienced manager, Mr. Sambre has managed to deliver competent results so far. The team looks to allocate predominantly in mid-cap stocks which comprise of nearly 72 per cent of the portfolio. The rest of the portfolio is allocated to stocks of small sized companies which constitutes nearly 25 per cent. Additionally, the fund’s portfolio focuses heavily towards the banking/finance and manufacturing sectors.
Owing to the fund’s bias towards mid-cap companies, the fund has consistently managed to top the charts in most years since its inception while providing consistent earnings growth as well. The reason behind this is pretty simple; mid-cap stocks often tend to give huge returns as and when they become large cap stocks. As the economy and companies grow concurrently over the passage of time, a small-cap company with strong business model and good management gets converted into a large company. The fund management team headed by Mr. Sambre tend to look out for similar companies across the index which show great growth potential.
Similarly, owing to the fund’s decent degree of exposure to small-cap stocks, the fund’s performance has sky-rocketed especially in the past few years. Although having said that, the strategy does entail a riskier and patient approach as the fund needs to grow quicker as compared to large cap funds which are generally known for their pragmatic and well thought-out growth approach. Further, it also runs the risk of faring worse in down markets. However, backed by the team’s astute stock-picking, the fund has managed to outperform the benchmark in recent years.
Investors looking to create wealth, take care of lifestyle demands along with other medium to long-term aspirations should definitely look to invest in this fund. Moreover, the fund’s reasonable allocation to small-caps can also help boost future returns as well. Investors should look to invest in this fund via the SIP investment route owing to its positive outlook and future growth potential. This mutual fund investment is currently ranked third in the Small & Mid Cap category by CRISIL, for the quarter ended June 2017, thus managing to retain the same rank from last quarter. It has also retained its Morningstar Analyst Rating of Silver. There is also the incentive of zero capital gains tax if you stay invested in this fund for more than a year.
If you are looking for one of the top mutual funds in India and looking to adopt a long-term approach while staying invested in this fund keeping in mind an investment horizon of at least 5 years, you can approach our financial advisors for customised investment plans.