Mutual Fund Weekly Analysis: Canara Robeco Flexi Cap Fund

Canara Robeco Flexi Cap Fund is a growth-oriented Flexi Cap Mutual Fund that has done reasonably well during the bull as well as the bear market phases and has rewarded investors with handsome gains over the long run.
 

Past performance is not an indicator of future returns
Data as of August 16, 2023
(Source: ACE MF)

Canara Robeco Flexi Cap Fund has managed to generate a significant lead over the benchmark and the category peers over longer time periods. Notably, the fund has trailed the benchmark and some of its prominent peers in the current bull phase, which has affected its returns in the short term. However, over the long-term period of 5 years and 7 years, Canara Robeco Flexi Cap Fund currently stands among the top quartile performers in the category.

Canara Robeco Flexi Cap Fund has fared well on risk-returns parameters and has delivered decent risk-adjusted returns for its investors. With a Standard Deviation of 14.1%, Canara Robeco Flexi Cap Fund has encountered much lower volatility when compared to many of its category peers and the benchmark. Its Sharpe ratio is competitive to the category average, though slightly lower than the benchmark.

[Read: Best Flexi Cap Mutual Funds to Invest in 2023 - Top Performing Flexi Cap Mutual Funds in India]

What is the investment strategy of Canara Robeco Flexi Cap Fund?

Canara Robeco Flexi Cap Fund is classified under the Flexi Cap fund category and is mandated to hold a minimum of 65% of the assets in equity and equity-related instruments with the flexibility to dynamically allocate assets across market caps without any limit or restriction.

The fund adopts a mix of the 'top-down' and 'bottom-up' approach to investing. While evaluating companies, the fund manager, Mr Shridatta Bhandwaldar, gives importance to qualitative features, management, and governance. He also looks at quantitative parameters by analysing the balance sheet and uses valuation metrics to determine the underweight/overweight position. The core focus of the fund remains on cash flow generating businesses. Canara Robeco Flexi Cap Fund holds a pre-dominant large-cap biased portfolio, where at least 70% of its asset is invested in large caps, with the remaining in mid and small-caps. Focusing on long-term growth, the fund follows a buy-and-hold investment strategy until the full potential of its holdings is derived.

As of July 31, 2023, Canara Robeco Flexi Cap Fund held 61 stocks in the portfolio. The top 10 stock holdings in the portfolio accounted for nearly 43.1% of the total assets. Popular large-cap names like HDFC Bank, ICICI Bank, Reliance Industries, Infosys, and L&T appear in the list of its top portfolio holdings. Most of these stocks have been a part of the fund's core holding for multi years now. The fund's portfolio turnover has ranged between 25-35% in the last one year, signifying low churning in the portfolio.

In the last two years, Canara Robeco Flexi Cap Fund has benefited immensely from its holding in ICICI Bank, Polycab India, L&T, ABB India, Max Healthcare Institute, SBI, Cholamandalam Investment & Finance Company, and Axis Bank which turned out to be major contributors to its returns. However, its exposure to certain stocks such as Infosys, Max Financial Services, Gujarat Gas, and Atul, eroded some of its gains.

While the fund's portfolio is biased towards cyclicals, it holds substantial exposure to sensitive and defensive sectors as well. Around on third of the fund's portfolio is concentrated in the Banking and Finance sector, followed by Engineering, Consumption, Infotech, and Auto & Auto Ancillaries that collectively account for another 34.8% of its assets. It also has substantial exposure in Petroleum, Cement, Pharma, Telecom, Chemicals, and Healthcare having an allocation in the range of around 2% to 5% of its assets.

Is Canara Robeco Flexi Cap Fund suitable for my investment goals and risk tolerance?

Canara Robeco Flexi Cap Fund holds a flexible mandate to invest across market caps without any upper or lower limit and accordingly maintains a well-diversified portfolio of quality stocks with a long-term view. Despite being an aggressive growth-oriented fund, the fund manager avoids taking momentum bets and focuses on quality stocks with solid growth potential in the long run.

Canara Robeco Mutual Fund is a process-driven fund house that employs sound risk management techniques. This has helped Canara Robeco Flexi Cap Fund do well to curb the downside risk during depressed conditions as seen during the market crash of 2020. Moreover, the performance on the upside has been in line with that of the benchmark. In certain market phases, the fund has more than outperformed the index and the category average. This ability enables it to rank high in terms of risk-adjusted returns.

Canara Robeco Flexi Cap Fund is suitable for investors looking to benefit from diversification across market caps over an investment horizon of at least 5 years.

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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DIVYA GROVER is the co-editor for FundSelect, the flagship research service of PersonalFN. She is also the co-editor of DebtSelect. Divya is an avid reader which helps her in analysing industry trends and producing insightful articles for PersonalFN’s popular newsletter – Daily Wealth letter, read by over 1.5 lakh subscribers.
Divya joined PersonalFN in 2019 and has since then used stringent quantitative and qualitative parameters to analyse funds to provide honest and unbiased research to investors. She endeavours to enable investors to make an informed investment decision and thereby safeguard their wealth.

Disclaimer: Investment in securities market are subject to market risks, read all the related documents carefully before investing.
This article is for information purposes only and is not meant to influence your investment decisions. It should not be treated as a mutual fund recommendation or advice to make an investment decision in the above-mentioned schemes.

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