Canara Robeco Bluechip Equity Fund: Aiming for Stability through a Diversified Portfolio

Sep 09, 2022

Listen to Canara Robeco Bluechip Equity Fund: Aiming for Stability through a Diversified Portfolio

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The Sensex is yet again inching towards its all-time high levels it achieved in October 2021. However, investors must remain cautious as markets are expected to remain volatile in the near term and an intermediate correction cannot be ruled out.

Investors should focus primarily on Large Cap Funds. Although Large Cap Funds aren't very appropriate for aggressive investors willing to take higher risks for high returns, it is always advisable to have a significant allocation to these funds. Large Cap Funds not only add much-needed stability to your portfolio but can also reward you in extremely volatile conditions. You can check out PersonalFN's list of the best Large Cap Funds to invest in 2022 here.

Canara Robeco Bluechip Equity Fund is a Large Cap Fund that has shown superior growth and has clearly outpaced many of its giant-sized peers in the last few years.

Graph 1: Growth of Rs 10,000 if invested in Canara Robeco Bluechip Equity Fund 5 years ago

Canara Robeco Bluechip Equity Fund is a relatively small-sized scheme in the Large-cap Fund category. Launched over a decade back in August 2010, Canara Robeco Bluechip Equity Fund has shown a complete turnaround performance in the last few years and registered an extraordinary phase to make it to the list of category outperformers. Due to the recent outperformance, the fund has caught the attention of investors; its corpus has nearly doubled in the last one year. The fund managers' strategy of sticking to index heavyweights that have been driving the index over the last few years has turned in its favour and paid off the investors with superior returns. During the 2020 market crash, the fund managed to limit the downside, generating an alpha of over 7.5 percentage points when compared to the index, while it also performed reasonably in the ensuing bull phase, thus improving its overall performance. Over the last 5-years, Canara Robeco Bluechip Equity Fund has registered a compounded annualised growth of around 15.1%, as against about 13.3% CAGR delivered by its benchmark S&P BSE 100 - TRI index.

Graph 1
Past performance is not an indicator of future returns
Data as on September 07, 2022
(Source: ACE MF)
 

Table: Canara Robeco Bluechip Equity Fund's performance vis-á-vis category peers

Scheme Name Corpus (Cr.) 1 Year 2 Year 3 Year 5 Year 7 Year Std Dev Sharpe
IDBI India Top 100 Equity Fund 601 4.19 29.24 21.57 12.22 13.46 21.36 0.23
Canara Rob Bluechip Equity Fund 8,062 0.15 24.67 21.50 15.08 15.79 20.11 0.24
Kotak Bluechip Fund 4,703 1.81 27.00 20.59 13.48 14.43 22.14 0.22
Nippon India Large Cap Fund 12,193 11.58 32.96 20.35 13.26 14.58 24.74 0.20
Mahindra Manulife Large Cap Pragati Yojana 198 3.50 28.39 19.75 -- -- 21.54 0.20
UTI Mastershare 10,136 0.74 26.25 19.47 13.37 13.56 21.56 0.21
ICICI Pru Bluechip Fund 32,525 6.47 27.82 19.25 13.03 14.84 21.90 0.20
SBI BlueChip Fund 32,773 4.43 28.03 19.24 12.16 14.07 22.60 0.20
IDFC Large Cap Fund 1,066 1.56 23.37 18.97 11.66 13.95 21.30 0.20
Edelweiss Large Cap Fund 342 1.60 25.19 18.68 13.51 13.98 21.63 0.20
S&P BSE 100 - TRI 4.46 27.49 19.44 13.31 14.54 22.72 0.20
Returns are point to point and in %, calculated using the Direct Plan-Growth option. Those depicted over 1-Yr are compounded annualised.
Data as on September 07, 2022
(Source: ACE MF)
*Please note, this table only represents the best performing funds based solely on past returns and is NOT a recommendation. Mutual Fund investments are subject to market risks. Read all scheme-related documents carefully. Past performance is not an indicator for future returns. The percentage returns shown are only for indicative purposes.
 

Canara Robeco Bluechip Equity Fund holds a superior long-term performance track record and figures among the top quartile performers over longer time periods. Even though the fund has trailed the benchmark and some of its prominent peers by a noticeable margin in the last 1-year and 2-year period, it is not expected to have a lasting impact on its long-term fundamentals. The fund holds high growth potential and has the capability to outpace the benchmark and its prominent category peers over the long term. The returns generated by Canara Robeco Bluechip Equity Fund over the last 3-year, 5-year, and 7-year periods are far better than the benchmark as well as the category average, during which it managed to generate alpha at a CAGR of about 1 to 2 percentage points over the benchmark index.

This outperformance has come at a far reasonable risk when compared to the benchmark and category average. The fund’s Standard Deviation (20.11%, annualised) is much lower than its benchmark (22.72%) as well as the category average (21.68%). Canara Robeco Bluechip Equity Fund ranks high in terms of risk-adjusted returns (as denoted by the Sharpe ratio) and has remarkably outperformed its benchmark as well as the category average.

Kotak Emerging Equity Fund: Showcasing Superior Growth
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Investment strategy of Canara Robeco Bluechip Equity Fund

Categorised under Large-cap fund, Canara Robeco Bluechip Equity Fund is mandated to invest a minimum of 80% of its assets in large-cap stocks. Accordingly, it focuses on bluechip companies and invests in stocks of companies figuring in the list of top 100 companies based on market capitalisation. While selecting stocks for the portfolio, the fund focuses on companies and sectors that are expected to perform better than the general market and uses inputs from the internal quant model to identify investable companies. Canara Robeco Bluechip Equity Fund follows a blend style of investing i.e. it looks for high-growth stocks available at fair valuation and stays invested for a long term.

While building its portfolio, Canara Robeco Bluechip Equity Fund follows a 3-Step investment process designed to achieve the investment objective in a disciplined manner as follows:

Step 1 - Idea generation from the investment universe

Step 2 - Screening process to shortlist investible ideas

Step 3 - Finalising the portfolio

In the screening process, the fund manager gives weightage to competent management, robust business fundamentals, and reasonable valuations.

The fund manager aims to invest in large-sized companies with an established business presence, good reputation, and solid brand equity. Canara Robeco Bluechip Equity Fund usually holds about 45-50 stocks in its portfolio and follows a buy-and-hold investment strategy, which reflects the strong long-term conviction the fund management has when it picks stocks for the portfolio. The fund had a reasonable turnover ratio in the range of 35-45% in recent months.

Graph 2: Top portfolio holdings in Canara Robeco Bluechip Equity Fund

Graph 2 Graph 2
Holding in (%) as of August 31, 2022
(Source: ACE MF)
 

Canara Robeco Bluechip Equity Fund usually holds a fairly-diversified portfolio of about 45 to 50 stocks. As of August 31, 2022, the fund held 46 stocks in its portfolio spread across sectors. The top 10 stock holdings accounted for about 51.8% of the portfolio. Index heavyweights like ICICI Bank, HDFC Bank, Reliance Industries, Infosys, and SBI currently find a place in the top 5 portfolio holdings. Many of these stocks have been part of the fund’s top holding for over two years now.

Canara Robeco Bluechip Equity Fund’s bet on ICICI Bank, Reliance Industries, SBI, Page Industries, L&T, and Tata Motors turned out to be rewarding in the last one year. However, the fund lost some value on its holdings in Infosys, TCS, and HDFC Ltd., among others.

Among sector holdings, Canara Robeco Bluechip Equity Fund’s portfolio is majorly exposed to Banking and Finance having a combined allocation of around 36.8%. Consumption, Infotech, Auto, Petroleum, and Engineering are among the other prominent sectors in the portfolio with an exposure of about 6% to 10% in each. It also holds diversification to Pharma, Telecom, Cement, etc. The top 5 sectors in the fund’s portfolio together account for around 63.7% of its assets.

 

Suitability

Canara Robeco Bluechip Equity Fund has evolved strongly in terms of performance by distinctly outperforming the benchmark, as well as most of its large-sized peers even in depressed market conditions. Meanwhile, its performance during market uptrends has been reasonable.

Backed by a well-defined investment process, Canara Robeco Bluechip Equity Fund has the ability to timely pick quality names having high growth potential, and deliver market-beating returns in the long run. The fund has proven its worth for long-term investors and is well capable of generating superior risk-adjusted returns even in stressful conditions.

Despite its relatively smaller size, the fund is well placed to compete with its giant-sized large cap peers and generate market-beating returns in the long run. It is suitable for long-term investors having a preference for the stability of large caps along with the potential to generate decent alpha in terms of returns.

 

Warm Regards,
Divya Grover
Research Analyst

 

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Note: This write up is for information purpose and does not constitute any kind of investment advice or a recommendation to Buy / Hold / Sell a fund. Returns mentioned herein are in no way a guarantee or promise of future returns. As an investor, you need to pick the right fund to meet your financial goals. If you are not sure about your risk appetite, do consult your investment consultant/advisor. Mutual Fund Investments are subject to market risks, read all scheme related documents carefully.

 

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About the Company including business activity

Quantum Information Services Private Limited (QIS) was incorporated on December 19, 1989.

QIS was promoted by Mr Ajit Dayal with an objective of providing value-based information/views on news related to equity markets, the economy in general, sector analysis, budget review and various personal products and investments options available to the Public. It was the first company to start equity research on an institutional level.

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  14. Murali Ananthan Krishnan.

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