Mutual Funds
DSP BlackRock Dynamic Asset Allocation Fund: Aiming to time the market

Dynamic plans give fund managers the flexibility to time the market but it has not worked that well so far

DSP BlackRock Mutual Fund plans to launch a new fund-DSP BlackRock Dynamic Asset Allocation Fund. According to the offer document filed with the Securities and Exchange Board of India (SEBI), it would be an open-ended fund of funds scheme where the investment manager will have the discretion to take aggressive asset calls. The fund manager could choose to invest anywhere from 0% to 100% in equity assets; in this case the money would be invested in units of DSP BlackRock (DSPBR) Equity Fund while the rest would be invested in units of DSPBR Strategic Bond Fund and money market securities or liquid schemes of DSPBR.

Dynamic schemes are attempts at market-timing-something that fund companies usually claim should not be done. Not surprisingly, the idea has been hard to implement. The performance of dynamic schemes is difficult to be judged as there is no such index to benchmark their performance. But given their flexibility they are expected to perform better than other schemes or at least give positive returns. DSPBR has chosen the Crisil Balanced Fund index to benchmark the performance of this scheme.

DSPBR Equity Fund is one of the newer schemes of the fund house having been launched less than five years ago. In the last three years the scheme has returned 19.72% compared to the benchmark return of 12.31%. Another scheme which has done well in the past from DSPBR's stable is DSPBR Top 100 Equity Fund. In fact the fund management of DSPBR has done reasonably well with three out of four equity diversified schemes consistently beating the benchmark over the last twelve five-year monthly rolling periods.

But this performance has come without the flexibility of dynamic asset allocation. Will the flexibility be a boon or a bane? Fund managers are skilled in studying a company and buying the stocks for the long-term. Only a rare few, anywhere in the world, are astute market-timers and they apply very sophisticated and proprietary quantitative techniques because no formula works in all market conditions. This would be a tough task, but seeing that this scheme is benchmarked against a balanced fund index, the fund managers would follow a similar allocation, investing around 65% in the equity scheme and the rest in the debt scheme.

Similar funds like ICICI Prudential Dynamic Fund and HSBC Dynamic Fund have had an allocation of 80% to 90% in equity over the last one year. Pramerica Dynamic Fund had a 70% to 75% allocation towards equity in the same period. How have these funds performed? In the last one year when the S&P Nifty returned -10.35%, ICICI Prudential Dynamic Plan performed the best returning -6%. Pramerica Dynamic Fund and HSBC Dynamic Fund returned -8.07% and -9.60% respectively. The Crisil Balanced Fund index returned -3.44% in this period and the Crisil MIP Blended Fund index (15% equity, 85% debt) returned 5.72%. Therefore fund managers of dynamic schemes have not been that adept at using their flexibility in a volatile market.

A better option for the investors would be to rely on a systematic investment plan. Which scheme to choose? A good equity diversified scheme would do the trick. DSPBR Equity Fund has done well and is a deserving candidate for your money.



A S Paranjape

3 years ago

Some facts needs correction.
1. DSPBR equity fund is launched on 29.4.1997 i.e. more than 15 years old and not 5 years.
2.Dynamic asset allocation need not restrict to 65% equity. It has mandate to vary both equity and debt from 10% to 19%
3.No comment is made on the theme i.e. about Yield gap ratio on which the re-balancing will be done.

Raid on cosmetics factories in Kerala; products worth Rs50 lakh seized

The manufacturers have given misleading and wrong advertisements of their products claiming magical cures for certain illnesses and physical conditions

Kochi: In simultaneous raids on "Ayuredic" cosmetic drug manufacturers across Kerala on Thursday, Drug Control authorities seized hair oil, skin-care oil, face creams and other products valued at around Rs50 lakh, reports PTI.

The manufacturing facilities of three brands were raided and cases registered under the Drugs and Cosmetic Act and the Drugs and Magic Remedies (Objectionable advertisements) Act.

Sources said these manufacturers had given misleading and wrong advertisements of their products claiming magical cures for certain illnesses and physical conditions.

Many of these claims were highly exaggerated and there had been complaints that some of these products were harmful to health.

The drug controller's office had received numerous complaints that certain 'ayurvedic' hair oils that claimed to help rich hair growth had actually caused hair fall. Some of the 'ayurvedic' skin-care creams and face lotions had given negative results.

Officials from both the Ayurvedic and allopathic branches of the Drug Controller's office took part in the raids. The seized drugs were produced in Courts in the respective districts, officials said.


Industrial production dips by 3.5% in March

The IIP has been dismal at 2.8% in FY12 as compared to 8.2% in previous fiscal due de-growth in mining at 2% and slower 2.9% growth in manufacturing

New Delhi: Indicating sharp slowdown in the economy, industrial production declined by 3.5% in March mainly on account of contraction in manufacturing and mining output, reports PTI.

Growth in the factory output, as measured by the Index of Industrial Production (IIP), was higher at 9.4% in March last year.

The industrial production has been dismal at 2.8% in 2011-12 as compared to 8.2% in previous fiscal due de-growth in mining at 2% and slower 2.9% growth in manufacturing, as per latest government data released here today.

Output of the manufacturing sector, which constitutes over 75% of the index, contracted by 4.4% in March, compared to growth of 11% in March 2011.

Mining output too declined by 1.3% in March, as against growth of 0.4% in the same month a year ago. The capital goods output contracted by 21.3% as against a growth of 14.5% in the same month last year.

Consumer goods output has grown by a meagre 0.7%% in March, as compared to 13.2% in the same month last year. Besides, the consumer durables segment output grew by 0.2% in March, as against robust 14.9% growth in the same month last year.

Power generation witnessed a growth of 2.7% in March, compared to 7.2% in the year-ago period.

In terms of industries, ten out of twenty two industry groups in the manufacturing sector have shown positive growth during the month of March as compared to the same month a year-ago.


We are listening!

Solve the equation and enter in the Captcha field.

To continue

Sign Up or Sign In


To continue

Sign Up or Sign In



The Scam
24 Year Of The Scam: The Perennial Bestseller, reads like a Thriller!
Moneylife Magazine
Fiercely independent and pro-consumer information on personal finance
Stockletters in 3 Flavours
Outstanding research that beats mutual funds year after year
MAS: Complete Online Financial Advisory
(Includes Moneylife Magazine and Lion Stockletter)