Gopal Agrawal, fund manager of DSP Top 100, a large-cap fund, and DSP Focus Fund, a focused fund, has quit DSP Investment Managers Pvt. Ltd, the asset management company (AMC) announced on 28 May. The two schemes had a collective AUM of about ₹3,600 crore, about 9.5% of the equity assets under management (AUM) handled by the AMC.
From 1 June, the funds will be taken over by Vinit Sambre, head of equities at the AMC. Sambre is an experienced fund manager, but has traditionally managed DSP Small Cap Fund (earlier DSP Microcap Fund), leading to some questions about whether he would be equally effective in a large-cap role.
Mint spoke to the AMC and financial planners to get some answers.
“Investment principles are far more important than labels like large-cap and mid-cap. Agrawal achieved some progress with alpha generation in the two schemes for the 20-odd months he was with us and it is a priority for us to continue generating alpha there,” said Kalpen Parekh, president, DSP Mutual Fund.
Agrawal took over the schemes in October 2018. Before that he was with Tata Mutual Fund, Mirae Asset Mutual Fund and SBI Mutual Fund, research from Value Research showed. “Vinit hasn’t just managed small-caps. We have an AIF (alternative investment fund), which is market- cap agnostic, that Vinit manages. Also about 25-35% of DSP Mid Cap Fund that Vinit manages is in large-cap companies,” Parekh added.
Some financial planners expressed reservations about the change in fund management. “All AMCs refer to process orientation, but at the end of the day the fund manager matters. I have closely followed Gopal for many years, particularly for DSP Focus Fund. Unlike a diversified fund, focused funds have few stocks and need high conviction. I will be carefully watching its performance over the next few quarters to decide whether to exit or not,” said Nishith Baldevdas, a Chennai-based Sebi-registered investment adviser.
However, Parekh dismissed concerns about different styles between the two managers. “Among our fund managers, Sambre’s style is the closest to Gopal’s. Both Vinit and Gopal look for strong free cash flows and these cash flows being reinvested in the business. They are both extremely conscious about valuations. As far as the focused fund goes, actually Vinit’s style is relatively a focused-high-conviction one as can be seen from the AIF,” said Parekh.
A fund manager’s departure by itself is not a trigger to exit a scheme. In addition, Sambre’s overall charge of equities would’ve also given him an overview over the two funds in question. Investors should keep a close watch on the two schemes over the next two-three quarters before making any decision.