Setting its own course – DSP BlackRock

A steady performer with a clean image, the DSP BlackRock AMC has become a fund house to be reckoned with.

With gold being the flavor of the day, the industry is busy churning out gold funds. But DSP BlackRock is in no hurry to follow suit, preferring to go by its convictions rather than following the herd. 

This is evident in its compact product line. “You will not find any duplication in our funds. All our 24 funds have a distinct theme. We did not go for the merger of any equity scheme,” points out Ajit Menon, EVP - Head of Sales & Marketing, DSP BlackRock Mutual Fund.

Similarly, in distribution, DSP BlackRock prefers to do things differently. BlackRock’s global policy does not encourage showering its distribution partners with expensive foreign junkets on attaining AUM targets.

So, does this act as a stumbling block in growth? The verdict is divided. “A distributor once told me that we are a good fund house and he has some allocation to our fund. Such comments are reassuring,” says Ajit Menon.

It plans to actively engage its 3,500 distribution partners at an intellectual level. “We need to build a lot more credibility for financial advisory profession. We believe they need a lot more skill development. We are planning to run a program beginning which will help them build their business,” says Ajit.

From managing Rs. 15,945 crore in April 2009, it has climbed to the eighth position with AUM of over Rs. 30,000 crore. The growth predominantly came from fixed income including FMPs and by launching funds at the right time. “One of the things the market recognizes is that we launch funds at the right time” says Ajit.

The launch of DSPBR Top 100 Equity Fund in March 2003 was aimed at capitalizing the potential of large caps. The scheme garnered Rs. 30 crore. Today, the fund’s AUM stands at Rs. 2,870 crore.

When most AMCs shied away from launching funds during 2004 elections, it came out with TIGER (The Infrastructure Growth and Economic Reforms Fund). It collected Rs. 170 crore which has reached Rs. 1,451 crore now.

Filling the gaps

It filled the gap in its fixed income portfolio where it was inactive. Today, it manages Rs. 9,000 crore in FMPs only. Over the last one year, its overall fixed income assets have grown from Rs. 6,000 crore to Rs. 16,000 crore.

While these flows are largely institutional, DSP is steadily seeing increasing retail interest in its fixed income schemes as well. “We are seeing a lot of retail interest in the fixed income side,” says S Nagnath, President & CIO, DSPBR AMC.

International Funds

DSP’s major thrust now is on bringing the popular products from its BlackRock stable to Indian investors. Its recent fund DSPBR World Agriculture collected Rs. 48 crore. With Rs. 1,318 crore assets in international feeder, it commands a lion’s share in this category and six more funds are awaiting SEBI’s nod. It commands 7% market share in the equity funds and 52% share in international feeder funds.

In 2007, it tested waters in the feeder funds category by launching DSPBR World Gold Fund, which has grown to Rs. 1,141 crore now.

While advisors are yet to be fully convinced about the diversification aspect of international feeder funds, its funds have collected decent money from investors. “We have found good response to our previous offerings. It depends on how the advisor and investor evaluate the opportunities that exist,” reveals Nagnath. Geographic diversification is necessary. However, one school of thought observes that the financial markets are connected like never before and the tremor of one market can be felt in any other market.

Having proved itself on the active fund management side, DSP BlackRock is mulling over bringing passive funds in its product portfolio. “We are evaluating that segment,” says Nagnath. 

Stable Team

What binds DSP team is its team long commitment. Although Nagnath had a short stint at Credit Suisse Asset Management, he has been associated with DSP since its inception in 1996 as a CIO. Anup Maheshwari - EVP, Head Equities & Corporate Strategy has been with DSP since 1997. Similarly, Dhawal Dalal (Head of Fixed Income) and Ramamoorthy Rajagopal (EVP, CAO) have been with DSP since 1996. “The culture flows down from the top management. The culture of our firm is such that people feel a sense of belonging and being part of something good and respectable,” adds Ajit.

Looking Ahead

DSP BlackRock feels it has all the basic elements in place. “We have everything that we require to get there. We have the right team, a strong brand, good culture and high benchmark processes. I think we have all the ingredients to keep growing,” adds Ajit.

It aims to leverage its performance further by creating a pull as wells as a push. Going ahead, it has set out two key goals – to be better known among the investors and to create a greater connect with advisors.