DSP Dynamic Asset Allocation Fund was launched by the DSP Asset Management company on 14th February 2014. The fund is an open-ended dynamic asset allocation hybrid fund. The fund size (Asset Under Management) is Rs. 1547 Cr.
Compared with CRISIL Hybrid 35+65 Aggressive index. So, we will not be comparing this Nifty 50. Rather the comparison is with the Category average. So the fund performance and risk appetite measurements will be done with the category average.
It is core equity allocated with few debts into the portfolio. This fund has an expense ratio of 0.5% for the direct fund and 2.17% for regular funds. The fund has performed with a CAGR of 9.4% from the time of inception.
DSP Dynamic Asset Allocation Fund Overview:
As a hybrid aggressive fund, equity exposure should be from 65% – 80%, and debt instruments should share 20-35%.
The fund manager holds 66.79% in Equity, 26.26% in debt, and 7.95% in other components. The Equity portfolio has 49.56% in large-cap stocks, 10.36% in Midcap stocks, and 2.17% in smallcap stocks.
The total Debt instruments are in NCD bonds, other fixed-income components are placed in FD’s.
It has both Growth and Dividend options, direct and regular plans. The fund has outperformed its category average in all 1 year, 3 years, and 5 years of performance analysis.
The total holdings of the fund are 112 instruments. The top 20 holding accounts for 53% of the total assets. Highly diversified and risk-managed fund.
There is no entry load for investing in the fund. But, the exit load is 1% if redeemed within a year.
DSP Dynamic Asset Allocation Fund Performance:
The above image has informed us of the performance of the fund over the category average.
- 6 Month – 14.46% vs 17.11% (Category Average)
- 1 Year – 9.48% vs 8.75% (Category Average)
- 2 Years – 10.21% vs 7.89% (Category Average)
- 3 Years – 7.6% vs 5.49% (Category Average)
- 5 Years – 8.72% vs 7.71% (category Average)
Note: The performance is taken from the Direct plan.
Anyhow, the fund has failed to perform over the Nifty 50 Index. It is better to invest in an Index fund compared to these funds if it can’t perform more than 10%.
DSP Dynamic Asset Allocation Risk Analysis:
The risk analysis of the fund is taken for the last 3 years. We will be analyzing two parameters
- Volatility
- Risk-adjusted return
Volatility:
- Standard Deviation – 10.23 vs 7.79 (Category Average)
- Beta – 0.7 vs 0.3 (Category Average)
The fund is highly volatile when compared to the Nifty 50 and the category average.
Risk Adjusted Return:
- Sharp Ratio – 0.21 vs 0.07 (Category Average)
- Treynor’s Ratio – 0.03 vs 0.01 (Category Average)
- Jenison’s Alpha – (-0.51) vs (-0.59) (Category Average)
The fund offers a better risk-adjusted return.
Fundamental Analysis:
- P/B – 2.82
- P/E – 26.68
- Yield to Maturity – 4.65%
- Average Maturity – 1.5 Years
Insight for Investors:
- The fund has over-performed the category but failed to perform more than Nifty 50.
- As an investor, you should be clear on what is your expected return from the fund.
- For a short-term investment, it is advised to avoid Equity and stay with Ultrashort or Liquid funds. The return of 9.4% for 6 years, will not be a feasible one for investors.
- If you need a conservative in low volatility and better risk-adjusted return, then choose Index Fund.
- More than hybrid funds, Index funds are always a better choice.