Technology, Capital Goods and Media and Entertainment are sectors which have seen a good degree of investor interest. If you are an aggressive investor and are bullish on performances of these sectors, then DSP Merrill Lynch Opportunities Fund is worth having a look at. Here is a fund which easily adapts to changing market trends by switching between stocks and sectors in order to take advantage of appropriate market themes. Launched in May 2000, the fund is an equity diversified open-ended fund. It has an objective of generating long-term capital appreciation and income generation and distribution of dividend. S. Naganath, Chief Investment Officer says "In managing the fund, we use an opportunistic investment approach, and seek to take aggressive sectoral and stock positions to maximise performance. The portfolio is actively managed with a tactical investment strategy".

The fund has generated returns of 28.42 per cent since inception as against benchmark S&P CNX Nifty return of 18.02 per cent. Ir registered an excellent growth of 45.12 per cent and 48.39 per cent over the last three and five year-period respectively. For the same period, the fund's benchmark S&P CNX Nifty generated returns of 38.05 per cent and 30.77 per cent. However, during the last one year-period the fund generated a modest return of 15.20 per cent, slightly underperforming the benchmark S&P CNX Nifty which recorded a growth of 18.38 per cent. Speaking to myiris on the fund's recent performance, Naganath says "Over the last 9-12 months, the uptrend in the stock market has been characterized by narrow leadership within the large cap stocks leading to underperformance by many mutual funds relative to their benchmark indices. However, the medium and long term performance has been generally better when compared to the benchmark."

The fund has reported a 22 per cent jump in assets under management to Rs 1,408.09 crore as on April 2007 as compared with Rs 1,155.04 crore a year ago. The fund portfolio is well diversified across sectors and stocks. Looking at the portfolio, Reliance Industries, Infosys, Bharti Airtel, TCS and SBI are the top five holdings, comprising 20.65 per cent of the total portfolio as on April 30th 2007. IT, Capital Goods, Petroleum Products and Media & Entertainment are the top four sectors comprising of 45.37 per cent of the overall portfolio. Sector allocation, Naganath says, is a dynamic process taking into account a host of variables in fundamentals of companies within a particular sector. Sectors which have the potential to perform over the medium term are accorded a higher weightage.

The top holding of the fund over the period of one-year has more or less remained the same. Since May 2006, it has added stocks like Indiabulls Real Estate, GE Shipping, Ansal Properties and Cipla among few others while it has exited a few sugar stocks like Balrampur Chini, Shree Renuka and banking stocks like OBC and PNB. However, there is not much change in the cash component. Presently, it constitutes 3.37 per cent as against 4.02 per cent last year.

The fund's portfolio kitty is quite large and has increased over the past one year from 61 to 70 scrips. The portfolio has a good mix of large-cap and mid-cap stocks. But, its prime focus has always been large stocks mainly in the technology sector. When queried by myiris on this Naganath said, "While investor interest is returning to mid caps and small caps, not all stocks in this category are expected to do well. Therefore, besides focusing on incremental allocation, greater emphasis must be given to bottom up stock selection."