DWS Alpha Equity Fund: For the high risk investors

On analysis of the DWS Alpha Equity Fund, regular plan, Arnav Pandya says that the fund is meant for those investors who have a high risk taking ability as the fund is not consistent in its performance. Also, the results are visible in patches as an improvement in performance enables it to deliver strong returns for its unit holders. However, investors might have to wait for some time till that actually happens.

DWS Alpha Equity Fund (Regular Plan)

Nature: Equity oriented open ended

Inception: January 2003

Assets under Management: 96 crore at the end of November 2011

Fund Manager: Aniket Inamdar

Analysis

• The fund had the highest exposure to consumer non durables followed by banks at the end of May 2009. There was just around 3 per cent of the capital in cash and cash equivalents. The highest exposure in the portfolio was in Reliance Industries at nearly 9 per cent followed by ITC, HUL and Bharti Airtel but there were also some mid caps like Sintex and Cairn India in the top 10 holdings. It was underperforming its benchmark the Nifty over the one and three year time periods.

• Six months later banks were the top holdings in  the fund followed by consumer non durables and  petroleum products. Reliance industries was the top individual holding followed by Infosys and BHEL. The regular plan of the fund was outperforming the benchmark over the three and five year time period and the portfolio turnover ratio of the fund had climbed to 1.69 as it was doing some active fund management.

• At the end of May 2010 there was a slightly different position on the portfolio front for the fund. Banks were the top sector holdings of the fund but this was followed by transportation, software and industrial capital goods. There was a slightly aggressive approach in the portfolio management by the fund as Infosys the top holding of the fund had a 9.5 per cent exposure. Even some of the other top holdings like Reliance and ITC had a high exposure. The regular plan was now outperforming the benchmark over all time periods.

• Six months  later the top sector holdings  was still banks but there  was a difference  as the total exposure went up to nearly 15 per cent followed by transportation and software. Three banks were now in the top 10 holding list though Infosys and Reliance Industries remained the top two holdings with a significant exposure. There was also 7 per cent of the portfolio in cash and cash equivalents and it remained an outperformer over all time periods.

• The fund maintained banks as the top sector holding followed by software and petroleum products at the end of May 2011.  The top holding of the fund was Reliance Industries at nearly 9 per cent of the portfolio followed by ICICI Bank and two software companies TCS and Infosys all of whom had an exposure of over 6 per cent. The portfolio turnover dropped below one and it was now an underperformer over the one, three and five year time periods. 

• At the end of November 2011 the fund had the highest exposure to banks followed by software. Two other sectors that had a high exposure were Pharma and consumer non  durables. All the three bank stocks in the portfolio were in the top 10 holdings as were the two software stocks. Infosys had the highest exposure followed by HDFC Bank and ITC. An interesting point was the Mannapuram Finance was also in the top 10 list. The fund was a slight underperformer on the year one time period though was running almost equal on  the  three year  horizon.

• The fund is meant for investors who have a high risk taking ability as the fund is not consistent in its performance. Also results are visible in patches as an improvement in performance enables it to deliver strong returns for its unit holders though investors might have to wait for some time till that actually happens.

Disclaimer: Views expressed in this article are entirely personal.
arnavpandya@hotmail.com.

For full details of the fund including NAV performance, portfolio, and peer comparison click here.