Prajna Capital

DSP BlackRock Micro Cap Fund
Goal based Investing
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Posted: 03 Dec 2015 04:09 AM PST

DSP BlackRock Micro Cap Fund - Invest Online

The aim of the fund is to seek long-term capital appreciation by investing in a portfolio that is substantially constitutes of stocks that are not part of the top 300 companies by market capitalisation. Focus of the scheme is to deliver superior long term performance by selecting stocks of companies those are uncorrelated to broader markets & not sector specific.

Small- and micro-cap stocks usually set the market on fire in every bull phase and this fund stands out for its keen focus on this segment of the market. About 75-85 per cent of its portfolio is invested in small caps, with a 15-20 per cent mid-cap allocation. Unlike most funds in this category, it owns no exposure to large-cap stocks at all. The fund's mandate requires 65 per cent of the corpus to be invested in stocks that are not among the top 300 companies by market cap. This fund has been quite successful at navigating this challenging category, managing a three- to five-star rating for many of the last five years. In a category that has many funds that chase growth stocks, this fund doesn't fight shy of buying cyclicals, provided it can see prospects of a turnaround and an improving ROCE.

Small-cap stocks have been a choppy segment of the market, with the BSE SmallCap Index delivering a mere 8.1 per cent CAGR in the last seven years thanks to its high volatility. But this fund has successfully overcome the challenges in this market segment to post a 23.8 per cent CAGR - over thrice the benchmark return for the same period. Five-year and three-year returns also manage to beat the benchmark by double-digit margins. The strong performance has had the fund's assets expanding rapidly in the last one year from under R500 crore last April to over R2,000 crore by May 2015. As fund size can be a constraint to sticking to the micro-cap mandate, the fund restricts large lump-sum investments when markets appear overheated.

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Goal based Investing

Posted: 03 Dec 2015 02:07 AM PST

Make an auspicious beginning by investing small amounts, be regular, stay the course

In India, a large number of people look for an auspicious day to ven ture into something new .

It could be buying a car, a house, jewellery or investing in gold. This trend is psychological since people believe making a good begging on an auspicious day brings in divine blessings.

In the country, for a large number of people Akshaya Tritiya, which usually comes in April every year, is the best day to invest in gold. In addition, people also buy new things around Dushera, Diwali and other auspicious days. Financial planners and advisors are now even advising their clients to look at the prospect of starting to invest on an auspicious day , and that too for the long term. Starting to invest on an auspicious day , however, like investing on any other time, should adhere to the three basic rules of long term investing, they said.

The first rule of investing is that all investments should be goal based. That is you should be investing for a purpose in mind. When you invest without a purpose, you may be prompted to take the money out as and when you feel like, or whenever the market is volatile. Goal-based investing also stops people from redeeming their investments when the market is volatile. Two examples about goal-based long term investing. One is that of his client, an executive with a pri vate sector firm who came to him for advice on investing for his daughter's education and marriage. This client of his has been investing through the SIP route for the last 10 months, and with a pur pose which is 15 years in fu ture, and he has never asked t of delay in start Gurnani if he should get out of the market even when the m a r k e t showed extreme volatil ity in the last few months.

For my own retirement, I have been investing through the SIP route for the last nine and half years with the objective of building a corpus that I will require after 21 years (from now). I don't look at the returns and the corpus size on a regular basis. It's gone up by three times my investment as the power of compounding has kicked in.

Long term investing, that neutralizes the negative effects of market volatility, which is more pronounced during the short term, brings in the power of compounding, which is the second factor that one should look out for while starting to invest.

Although my monthly SIP investment amount is small, the returns that my investments of the past nine and half years generate, is substantial. The two, when taken together, makes for a substantial amount of savings every month