DSP BlackRock Microcap Fund is one of India’s most successful small-cap funds with annualised returns of 20.7% over the past 10 years. It has been successful to the extent that it had to halt fresh inflows in February 2017. The fund manager, Vinit Sambre, recently spoke about the fund in a house interview published on DSP BlackRock Youtube channel. Here is the transcript, written and edited by our team:
You generated this kind of alpha over almost a decade of managing the fund. What are some of the thoughts and practices you put in place for getting this outcome?
It has been a really simple strategy of identifying great businesses and management, investing in them and staying invested. This is easy to talk about and difficult to implement. We have followed this strategy over the past 10 years, we are following it even now and we believe that it should be able to deliver up to investors’ expectations over the next 10 years.
Stock selection is the building block for any mutual fund portfolio. Why is this particular aspect even more critical for a strategy like DSP BlackRock Microcap Fund?
It is more critical because we have experienced that in case of micro or small cap strategies, stock-specific factors play a dominant role in shaping performance and returns. In large-cap funds, it is more macros that drive performance. It is very important that we as the fund managers of micro cap and small cap funds really get into the details of these companies, understand their prospects and then take an investment call.
At the end of it all, who is DSP Microcap Fund suitable for? Who is the ideal investor in this strategy?
The fund has seen great performance in the last 10 or 11 years of its existence. But frankly, there was a period between 2008 and 2013 during which the fund generated hardly any returns. Investors who have the ability to withstand volatility; have patience over a long period of time; who understand value investment and who are looking for great companies – this product is meant for them.
You can watch the interview below: