Thursday, April 22, 2010 16:42 Hrs IST

DSP BlackRock MF Launches Focus 25 Fund

DSP BlackRock Mutual Fund announced the launch of DSP BlackRock Focus 25 Fund. This is an open ended equity growth scheme investing largely in companies, which are amongst the top 200 companies by market capitalisation. The portfolio will limit exposure to companies beyond the top 200 companies by market capitalization to 20% of the net asset value. The Scheme will normally hold equity and equity-related securities including equity derivatives, of upto 25 companies. The scheme will open for subscription from 23 April 2010.

The scheme will have a concentrated portfolio adopting a highly flexible investment approach. Concentrated portfolios are often the result when managers seek to sharpen the focus with regard to stock selection and therefore stock weightage in the portfolio.

What is rationale for launching a fund with this strategy?

In a market which has risen significantly over the last one year, there has been significant performance divergence not only among sectors but also amongst stocks within these sectors. This highlights the fact that besides sector selection, stock selection is extremely important.

A significant percentage of risk paring on account of diversification can be achieved with relatively fewer stocks, provided they are not of a similar type. While adding more stocks increases the degree of diversification, the ability of the scheme to generate relatively higher returns recedes as the number of stocks in the portfolio increases.

Equity schemes managed by us have delivered consistent long term performance which is a testimony to the stock selection skills of our investment team. The concentrated portfolio will enable the fund manager to sharpen his focus with regard to stock selection & portfolio construction and allows investors to benefit from the fund manager's stock selection ability.

Speaking to media Mr. S. Naganath said “We are pleased to announce the launch of DSP BlackRock Focus 25 Fund and believe that this fund will appeal greatly to investors who are seeking a concentrated equity portfolio.

Scheme Features

The New Fund Offer (NFO) price for the scheme is Rs 10 per unit.

The scheme will allocate 65% to 100% of assets in equity and equity related securities, which are amongst the top 200 companies by market capitalization. It would further allocate up to 35% of assets in debt securities, money market securities and cash & cash equivalents.

Growth and dividend reinvest options are available under the scheme.

Minimum investment amount is Rs 5000 and in multiples of Re 1 thereafter.

Entry load charge will be nil for the scheme. The exit load charge will be 1% for holding period less than 12 months and nil for holding period above & up to 12 months.

The schemes performance will be benchmarked against BSE Sensex.

The scheme will be managed by Apoorva Shah.