DSP BlackRock Opportunities Fund: One of the most consistent diversified funds in last 5 years

Regular Advisorkhoj blog readers know that, we give a lot of importance to mutual fund performance consistency. We have also developed a research tool, where our readers can see the top most consistent mutual funds in various product categories (please use our tool, Top Consistent Mutual Fund Performers). DSP BlackRock Opportunities fund, a diversified equity mutual fund, has been in top two performance quartiles in four out of the last 5 years.

The fund has also created substantial wealth for investors since its launch. If you had invested Rs 1 lakh in DSP BlackRock Opportunities Fund at the time of its inception (NFO) in May 2000 the value of your investment today (based on NAV of August 04, 2017) would be Rs 20.87 lakhs. The performance of this diversified equity fund in the recent years has also been quite consistent. The fund has consistently been in the top quartile, in terms of SIP returns over the last 3 to 5 years. The chart below shows the cumulative investment and current investment value of a Rs 5,000 monthly SIP in DSP BlackRock Opportunities Fund over the last 3, 4 and 5 years respectively.

Source: Advisorkhoj Research

DSP BlackRock Opportunities fund outperformed both its benchmark Nifty 500 and the diversified equity funds category over various trailing periods (please see the chart below).

Source: Advisorkhoj Research

The fund has also outperformed the benchmark and the category in terms of annual returns, in most years over the last 5 years (please see the chart below).

Source: Advisorkhoj Research

Rolling Returns

The three year rolling returns of DSP BlackRock Opportunities Fund shows strong performance consistency over the last 5 years. We have discussed a number of times in our blog that, rolling returns is the best measure of a fund’s performance consistency. The chart below shows the three year rolling returns of DSP BlackRock Opportunities Fund versus its benchmark index, Nifty 500.

Source: Advisorkhoj Rolling Returns Calculator

You can see in the chart above that, DSP BlackRock Opportunities Fund outperformed Nifty 500 consistently (100% of the times over the past 5 years). You can also see that, the performance differential between the fund and the benchmark is quite stable, which shows disciplined fund management approach of this mutual fund scheme.

Let us now compare the three year rolling returns of DSP BlackRock Opportunities Fund with that of the diversified equity fund category average over the last 5 years.

Source: Advisorkhoj Rolling Returns Calculator

You can see in the chart above that the three year rolling returns of DSP BlackRock Opportunities Fund outperformed the diversified equity fund category consistently (100% of the times) over the last 5 years.

The maximum three year rolling return of DSP BlackRock Opportunities Fund was around 29%, while the minimum three year rolling return of the fund was around 12%. The average three year rolling return of DSP BlackRock Opportunities Fund was 21.1%, while the median was 20.9%. The fund gave more than 15% three year rolling returns almost 94% of times and more than 20% three year rolling returns almost 60% of times. Readers should note that rolling return analytics do not indicate probabilities of expected returns in the future. We discussed the rolling return analytics to show that, the fund manager has a robust stock selection process and a disciplined portfolio management methodology.

Fund Overview

DSP BlackRock Opportunities Fund was launched in May 2000. It has Rs 3,147 Crores of assets under management (AUM) as on end July 2017. The expense ratio of the fund is 2.52%. The fund manager of this scheme is Rohit Singhania. The fund has a large cap bias and the investment style indicates growth preference. The turnover ratio of the fund is 111%. The fund has given 19.3% compounded annual returns since inception. The chart below shows the NAV movement of DSP BlackRock Opportunities Fund since inception.

Source: Advisorkhoj Research

Risk Adjusted Returns

In terms of volatility measures, the standard deviation of monthly returns of DSP BlackRock Opportunities fund is higher than the average standard deviation of monthly returns of diversified equity funds. However, the Sharpe ratio of the fund is superior to the average Sharpe ratios of the category, demonstrating the fund manager’s ability to deliver superior risk adjusted returns. The beta of the fund is around 1.06, which shows that the fund manager does not take too much risk. The fund manager has been able to deliver decent alphas.

Lump Sum Returns in last 5 years

The chart below shows the growth in Rs 1 lakh lump sum investment in DSP BlackRock Opportunities Fund (Growth Option) over the last 5 years. You can see that, a Rs 1 lakh lump sum investment in the fund would have grown to Rs 2.73 lakhs in the last 5 years (CAGR or more than 22%).

Source: Advisorkhoj Research

SIP Returns in last 5 years

The SIP returns of the fund over the last 5 years are more impressive. The chart below shows the returns of Rs 5,000 monthly SIP in DSP BlackRock Opportunities Fund over the last 5 years.

Source: Advisorkhoj Research

With a cumulative investment Rs 3 lakhs you could have accumulated a corpus of Rs 5.2 lakhs; a profit of more than Rs 2 lakhs in just the last 5 years. The annualized SIP returns of the fund was 22%.

Dividend Pay-Out Track Record

DSP BlackRock Opportunities Fund has a strong dividend pay-out track record. In the last 10 years, the fund paid dividends every year except 2009. You can see in the table below the dividend yields are also quite good.

Source: Advisorkhoj Historical Dividends

Conclusion

DSP BlackRock Opportunities Fund has completed nearly 17 years since its launch. The fund has sustained its strong performance track record over the years, despite changes in the fund management. The SIP performance of the fund is especially impressive in the last few years. The fund also has a good dividend pay-out track record. Investors can consult with their financial advisors if DSP BlackRock Opportunities Fund is suitable for their investment portfolios.