The DSP BlackRock Equity Fund – Regular Plan – Dividend
The DSP BlackRock Equity Fund – Regular Plan – Dividend would be the mutual fund for my savings. The symbol used by the mutual fund will be DSPG, which is currently trading at $37.39.
Fund Manager
The Fund Manager is Mr. Atul Bhole, a B.Com Chartered Accountant who has been overseeing the Fund since 2016.
Objective of the Scheme
According to the managers of the fund, the objective of the scheme is to generate long-term capital from the stock portfolio. The scheme also aims to satisfy its liquidity needs and goals by trading in debt and money market instruments. The investment manager finds both merit and development in the determination of investment prospects. The year when the fund started is in June 2007 under the Equity class of assets. The fund is under the benchmark of Nifty 500 Index. In the past 10 years, the mutual fund has been ranked among the best type of investment one could consider as an individual. By analyzing the year of the fund investment in the market, it is also important to consider other investment factors such as the asset turnover and the expense ratios.
Question 4
The funds category is under Equity Funds Diversified, and according to year 2017 financial analysis, the mutual fund has been ranked 3rd in the category of diversified equity. The diversified equity category is among the best choices one would choose in their investment. From my analysis, the reason for choosing the DSPG under the equity fund diversifies is that one does not have to be specific on the sector and size of investment. The type of fund diversifies investments across the stock market with the aim of maximizing gains for investors. Thus, when I invest my funds with the company, I expect a high return with moderate high risk. With its type of investment which is done across companies across different industry sectors, the fund maintain high growth in the economy since it is not limited to a specific sector.
Diversified equity fund is ideal for long term savings plan such as cases of retirement and children education. Since its objective is to have an increase in capital appreciation, investors are assured of a moderate risk return. The minimum investment in DSPG is $1,000, which is a flexible and affordable plan for first time investors.
Question 5
The mutual fund is rated as a three star in the Morning Star, where it is under the flexicap category and large growth investment style. The company ratings vary from one star to five stars and help it is used as a guideline for investors when making investment decisions. The ratings are estimated from past performances in terms of risks, cost adjusted returns, and fund manager’s skills. In our investment fund DSPG, it is a three star rating, which means that it has 35% of the funds allocation.
Question 6
Table 1
Year-to-date return for 2017
YTD
Growth of 10,000
13,321
Fund
33.21
+/- S&P BSE 500 India INR
3.29
+/- Category
1.80
% Rank in Cat
42
# of Funds in Cat
466
The above represents the annual average return for year 2017, which indicates the growth rate, funds investment and the return by the investment made.
Question 7
Table 2
Total return for calendar year ended 12/31/2016
1 Yr
Growth of 10,000
13,008
Fund
30.08
+/- S&P BSE 500 India INR
1.26
+/- Category
0.26
% Rank in Cat
50
# of Funds in Cat
466
Question 8
Table 3
Average annual return for the past 3 years
3 Yr
Growth of 10,000
13,804
Fund
11.34
+/- S&P BSE 500 India INR
1.87
+/- Category
-1.53
% Rank in Cat
66
# of Funds in Cat
446
Question 9
Table 4
Average annual return for the last 5 years
5 Yr
Growth of 10,000
21,502
Fund
16.55
+/- S&P BSE 500 India INR
2.62
+/- Category
-1.51
% Rank in Cat
66
# of Funds in Cat
218
Question 10
Table 5
Most recent top ten investment holdings inside the fund
Company
Market Value (Cr.)
Holding (%)
HDFC Bank Limited
139.72
5.56
Bajaj Finance Limited
93.60
3.72
Yes Bank Limited
91.21
3.63
CBLO / Reverse Repo Investments
81.50
3.24
Dalmia Bharat Limited
77.96
3.10
Question 11
The average expense ratio for year to date is at 2.32% (Table 6), which has been on a constant rate for the past three years. The company has had high cost of investment thus the increase in the expense ratio.
Table 6
Average Expense Ratio YTD
Year
2012
2013
2014
2015
2016
YTD
Annual Nex expense ratio
1.88%
2.07%
2.33%
2.32%
2.33%
2.32%
Question 12 and 13
In the mutual funds, a load represents funds paid by an investor, which is transferred to an agent or a financial advisor. Front end are fees paid upfront prior to the services while back end are payments done when the services are completed by the agent. The fees are estimated using a commission based on the value of stock sold.
Question 14
The portfolio turnover ratio, according to Morning Star is at 97% (Morning Star, 2017). The percentage represents the fund’s holdings that vary in a given financial period. The ratio of 97% for DSPG will be used to measure the funds trading activities. The estimated turnover amount is computed by dividing net of purchases and sales by the monthly net assets. With a high turnover rate, the company’s funds turnover is also high and there is reduction in the overall performance of the mutual fund investment.
Question 15
The risk rating done by morning star is for the past ten years and the category described is average (Table 7).
Table 7
Risk Rating Analysis
11/30/2017
3-Year
5-Year
Morningstar Return
0P00009J3N
Average
Average
Average
Morningstar Risk
0P00009J3N
Above Average
Above Average
Average
Morningstar Rating
0P00009J3N
-
-
-
# of Funds in Category
455
224
165
Question 16
The return rating done by Morning Star is for the past ten years and the category described is average (Table 7).
Question 17
Beta in relation to mutual funds investment measures the movement of funds compared to the market. The market is assumed to have a beta of 1.00, which will be compared with other mutual funds beta. DSPG has an average beta value of 1.11 as at investment year 2017. With a 1.1 beta of the mutual funds it means that my investment will have high returns of 10% higher than the index in an up market. The beta value will also help in determining the volatility and sensitivity of the fund. Thus, beta is important in choosing the mutual funds one should invest. Other factors considered is the standard deviation of the fund and for DSPG it is at 16.03%, yield to maturity, and Sharpe ratio.
Question 18
Table 8
$5,000 annual recurring investment starting at age 21 and ending at age 65
Investment, $5,000
Growth
0.49%
year
Return
25
5649.905
26
5677.59
27
5705.41
28
5733.366
29
5761.46
30
5789.691
31
5818.061
32
5846.569
33
5875.217
34
5904.006
35
5932.935
36
5962.007
37
5991.221
38
6020.578
39
6050.078
40
6079.724
41
6109.514
42
6139.451
43
6169.534
44
6199.765
45
6230.144
46
6260.672
47
6291.349
48
6322.177
49
6353.155
50
6384.286
51
6415.569
52
6447.005
53
6478.595
54
6510.34
55
6542.241
56
6574.298
57
6606.512
58
6638.884
59
6671.415
60
6704.105
61
6736.955
62
6769.966
63
6803.139
64
6836.474
65
6869.973
Question 19
Table 9
$10,000 investment in 2006-2007 for the last 10 years.
YTD
1 Mo
1 Yr
3 Yr
5 Yr
10 Yr
Growth of 10,000
13,256
9,908
13,123
13,440
21,229
26,326
Fund
32.56
-0.92
31.23
10.36
16.25
10.16
+/- S&P BSE 500 India INR
2.74
1.34
1.55
1.12
2.53
4.38
+/- Category
1.38
0.33
0.12
-1.87
-1.56
0.70
% Rank in Cat
44
35
54
72
66
40
# of Funds in Cat
472
475
472
452
221
165
References
DSP BlackRock Equity Fund (2017). Retrieved from https://invest.dspblackrock.com/mutual-fund-products/equity-schemes/multi-cap-equity-fund/dspeq-regular-dividend
Morning Star. (2017). DSP BlackRock Equity Reg DP. Retrieved from http://www.morningstar.in/mutualfunds/f0gbr06sdq/dsp-blackrock-equity-fund-dividend/overview.aspx
Taylor, C. (2016). How to calculate the return on an investment with recurring expenses. Retrieved from https://budgeting.thenest.com/calculate-return-investment-recurring-expenses-22781.html
Thune, K. (2016). What is a mutual fund's beta? What you need to know about a mutual fund's beta. Retrieved from https://www.thebalance.com/what-is-a-mutual-fund-s-beta-2466643
