Mar 20, 2008

DSP ML Technology.com Fund - Analysis

 DSP ML Technology.com: Returns downloaded

As the name suggests, DSPML Technology.com fund seeks to invest in the 'technology' theme, but the fund is diversified within this space to include software, media and entertainment, telecom services and hardware stocks.

Despite the pounding that IT stocks received in last year, the fund has delivered strong returns, vis-À-vis its benchmark — BSE Teck — which it has bettered over one, three and five-year periods, making it the best performing technology fund.

The portfolio consists of 49 stocks currently. Compared to Franklin Infotech fund, which is biased towards top-tier software companies, DSPML Technology is more diversified with exposure to sectors such as media. In October-December 2007, the fund's corpus grew by 5.4 per cent to Rs 202.5 crore, while the NAV per unit increased by 22.2 per cent Rs 36.98. This indicates that there may have been redemptions from the fund.

Sector and Stock Moves

Software: This sector continues to be the top holding of the fund and has seen steep increase in exposures to 57.7 per cent currently. But the fund appears to have picked up stocks that have lower US centricity and those with lower exposure to the banking and financial services vertical. This appears to be to reduce dependence on companies that are exposed to a depreciating dollar or a US slowdown.

The other noticeable trend is exposure to companies in the fast-growing domestic IT training segment. Stocks that have found themselves added to the portfolio during this period include Allied Digital, Infotech Enterprises, Geodesic Information, and KPIT Cummins, which have delivered 11-22 per cent returns (outpacing the BSE IT). HCL Technologies and Satyam Computer were also added.

Three stocks that have done very well over the past year — Everonn Systems, Tanla Solutions and KLG Systel — have been pared. Educomp Solutions, among the expensive stocks in the IT space, is the top holding. Infosys, TCS, Tech Mahindra, Rolta and Mphasis are among stocks that have stayed on.

Media & Entertainment: Adlabs Films, a stock that has more than doubled in value during this period, Sun TV, PVR, Entertainment Network, stocks that have risen 20-65 per cent find their way in. Here again, three good stocks — Balaji Telefims, ETC Networks and Prime Focus — have seen their way out. HT Media, Dish TV, Zee Telefilms have been retained during this period and are among the top holdings of the fund.

Telecom Services, Hardware: CMC and HCL Infosystems, two domestic hardware and IT players, continue to stay with the fund. Bharti Airtel and Spice Communications have been exited while Reliance Communications continues to be among the common stock held.

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