Kalpen Parekh, managing director and CEO of DSP Mutual Fund, has implemented significant portfolio rebalancing over the past 18 months as markets experienced corrections, geopolitical tensions, and a historic rally in gold and silver. According to reports from Mint, Parekh's philosophy remains unchanged despite market volatility, focusing on disciplined asset allocation and mean reversion principles. His approach involves rebalancing gold allocation from 22% to the preferred 10-15% range by reducing exposure to gold mining funds and increasing equity exposure through hybrid strategies.
The rebalancing strategy has resulted in increased equity exposure by approximately 7% over the last six months. As reported by Mint, Parekh achieved this by shifting from gold to hybrid funds, which automatically raise equity allocations during market corrections. His global equity allocation has increased from 17% to 25% of his total portfolio, with investments primarily through DSP's value fund, multi-asset fund, and the recently launched LRS fund through GIFT City. The CEO emphasizes buying quality businesses at reasonable prices rather than focusing on geographic diversification.
Parekh maintains gold as a crucial diversifier, particularly important in emerging markets where it outperformed stock markets in 24 out of 25 markets according to a study conducted two years ago. According to Mint reports, gold acts as a hedge against currency and systemic risks, providing stability during volatile periods. However, he advocates for timing the asset cycle rather than chasing performance, having accumulated gold during its eight-year stagnant period but avoiding overexposure during current outsized gains.
The current market environment presents selective opportunities across sectors, with BFSI stocks approaching fair value and select small-cap businesses down 30-40% despite strong fundamentals. As reported by Mint, Parekh identifies IT stocks as correcting and sees reasonable valuations emerging, though markets remain less expensive but not very cheap. His approach focuses on buying free cash flows at reasonable prices, whether in India or globally, maintaining his disciplined investment philosophy despite market noise and short-term volatility.
Parekh maintains 20-40% allocation in fixed income to provide stability and liquidity for deployment during market corrections. According to Mint reports, this approach allows him to take advantage of opportunities when equities are expensive, with the allocation adjusted between 20% and 40% based on market valuations. The CEO avoids alternative investments like real estate and maintains separate emergency funds through his fixed income allocation, which remains liquid and accessible within 24 hours.
