'We are quite confident of our investee companies and their ability to deliver long-term performance'

Most of DSP's equity funds have been struggling to keep up with their peers over the last two years.

While it is not the first time that the AMC's funds have been lagging behind during bull runs, it's their ability to avoid losses during market corrections that has helped them deliver outperformance over the long term. However, DSP Midcap Fund has not been able to replicate this trend in the ongoing correction phase, which has resulted in the longest stretch of underperformance that it has seen since its inception.

In this regard, we had a word with its fund manager, Vinit Sambre, who is also Head - Equities at DSP Investment Managers, to understand the reason for this rough patch and what can help it to narrow down the gap in returns going forward.

In the past, we have seen DSP funds do well over the long term because of their ability to do relatively well during market falls, even though they tend to lag behind during the rallies. However, that hasn't been the case this year. What, according to you, has hurt your funds the most? Are there any corrective actions that you have taken for making a comeback?

You are right. We have been underperforming as some of our stock selection has hurt us - mainly stocks from sectors such as banking, pharmaceuticals and chemicals. We believe some of our underperforming companies are facing near-term challenges but their long-term fundamentals are still intact. Their balance sheets are quite strong, they have invested for growth and the management has been running these businesses in a capital-efficient manner. This gives us confidence in our investee companies and their long-term outlook.

Secondly, we chose not to own some stocks within the index which performed well over the last two years as they didn't meet our fundamental framework, like companies within power utilities, etc.