The scheme will be benchmarked against Nifty 500 index and will allocate 65% in Indian equities and up to 35% in global equities. The international exposure is designed to provide an edge of diversification and a potential source of alpha generation to investors, the fund house said. The scheme will also invest up to 35% in debt & money market instruments and keep in cash or arbitrage whenever enough investment opportunities meeting the valuations criteria are not available.
DSP Value Fund aims to generate better risk-adjusted returns with lower volatility across cycles, the fund house said in a communication. Like other value funds, the scheme will offer diversification from expensive growth companies and focus on investing in companies that are reasonably priced, based on fundamental characteristics.
The fund house said that valuations are reckoned considering fundamental factors such as price to book ratios, returns on equity and long term sectoral trends. The portfolio is selected from the remaining companies and assigned weights according to internal risk concentration guidelines.
“In the current low interest rate world, good companies rarely come cheap. Hence it becomes important to apply disciplined rules to identify such companies at reasonable prices. Our approach is focused on being less prone to bias and offering better risk management to our investors along with the opportunity and flexibility offered by international diversification. Investors in this Scheme should have a long term orientation to endure phases of underperformance that is a part of the value investing journey.” says Kalpen Parekh, President, DSP Investment Managers.