DSP is bringing back the TIGER. Should you ride it?
The DSP TIGER Fund was a standout performer in 2007, drawing huge inflows. Infrastructure saw a massive rally from 2003 to 2007, and the DSP TIGER Fund, launched in June 2004, capitalized on this trend.
TIGER stands for the ‘the infrastructure, economic reforms and growth’ fund. What later happened to the DSP TIGER Fund is a great lesson for mutual fund investors. When the global recession of 2008 struck, TIGER crashed 58%. By November 2010, the market had staged a comeback and TIGER’s NAV again reached within 10% of its peak. But that was a false recovery.
Real estate and infrastructure sectors entered a lost decade. The great names of 2007 and 2010, like Lanco, GVK, GMR, and Unitech, faded away, and new sectors took over as theinfra-realty sectors saw a churn. A change of government at the Centre also catalysed some shifts.
After nearly 16 years in the wilderness, infra and realty saw a significant revival last year. The fund has surged by 81%, though valuations appear stretched. The portfolio's trailing PE ratio stands at 27 times, compared to 21 for the Nifty. This is partly due to the fund's exposure to mid and small-caps (54% of its portfolio) and its avoidance of relatively cheaper banks.
Fund manager Charanjit Singh has been in place since 2018 and is quite bullish on a sustained infrastructure revival. He points to diminishing capacity utilisation, a pick up in orders and structural displacement of manufacturing from China to India.
However, DSP AMC CEO Kalpen Parekh strikes a more conservative note. “We want people to know how much the fund has fallen in the past. We want people to stick to SIPs only, not invest lump sums. The fund has run up," he told a group of reporters at a press conference.
Yet the fund
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