Canara Robeco Bluechip Equity Fund: Balancing Risk-Reward Matrix
Listen to Canara Robeco Bluechip Equity Fund: Balancing Risk-Reward Matrix
00:00
00:00
Few days after the S&P BSE Sensex touched the historic milestone of 50,000 points, the equity market has started witnessing selling pressure.
Notably, while the stellar rally seen over the last few months have helped key market indices touch an all-time high, it has been ahead of the fundamentals. Therefore, we can expect the markets to remain volatile in the short term and a further correction cannot be ruled out.
Given the current expensive market valuation, it is important to tread with caution. If you are a conservative investor you may consider shifting investment from highly volatile mid and small cap funds, to their large cap counterparts or other stable asset class.
Large cap funds tend to be more resilient during tough market conditions and have the potential to reward investors with better risk-adjusted returns while maintaining the stability of the portfolio.
Canara Robeco Bluechip Equity Fund (CRBEF) is one such large cap fund that has clearly beaten its giant-sized peers in the recent crash and showcased its high growth potential over the last couple of years.
Graph 1: Growth of Rs 10,000 if invested in Canara Robeco Bluechip Equity Fund 5 years ago
CRBEF is a small-sized fund that remained an average performer for a major tenure of its existence. However, the fund has just registered its first ever extra-ordinary phase and even made it to the list of top performers. The fund’s corpus has grown over four times in the last one year due to its superior performance in the last couple of years. Its strategy of sticking to index heavy weights that have been driving the index over the last couple of years has turned in its favour and paid-off investors with superior returns. Over the last 5-year period, CRBEF has registered a compounded annualised return (CAGR) of around 17.4%, as against 14.9% CAGR delivered by its benchmark S&P BSE 100 – TRI index. Clearly, CRBEF’s recent extra-ordinary performance, supported by its ability to manage downside, helped it find a space in the list of top category performers.
Data as on January 27, 2021
(Source: ACE MF)
Table: Canara Robeco Bluechip Equity Fund's performance vis-a-vis category peers
Returns are point to point and in %, calculated using Direct Plan - Growth option. Those depicted over 1-Yr are compounded annualised.
Data as on January 27, 2021
(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.
CRBEF's high growth potential is clearly visible in the performance table above. The superior performance registered by the fund over the last year has helped improve its overall returns as well. With this the fund has achieved a mark of significantly outpacing the benchmark and prominent category peers across time periods. Over the 5-year and 7-year period, CRBEF's performance has been far better than the benchmark, where it has managed to generate an alpha of about 2.5 percentage points.
This outperformance has come at a far reasonable risk when compared to the benchmark and category average. The funds Standard Deviation (19.44%, annualised) is much lower than its benchmark (22.13%) as well as the category average (20.95%). In terms of risk-adjusted returns CRBEF currently ranks among the top performers in the category.
Investment strategy of Canara Robeco Bluechip Equity Fund
Categorised under large cap funds, CRBEF is mandated to invest a minimum 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 internal quant model to identify investable companies. The 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 portfolio, CRBEF follows a 3 Steps investment process designed to achieve the investment objective in a disciplined manner, where step 1 is idea generation from the investment universe, followed by step 2 - screening process to shortlist investible ideas, while finalising the portfolio in the step 3. 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. CRBEF usually holds about 40-45 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. Notably, the funds turnover ratio has ranged between 45% and 50% in recent months.
Graph 2: Top portfolio holdings in Canara Robeco Bluechip Equity Fund
Holding in (%) as on December 31, 2021
(Source: ACE MF)
CRBEF usually holds a fairly-diversified portfolio of about 40 to 45 stocks. As on December 31, 2020, the fund held 44 stocks in its portfolio spread across sectors. The top 10 stock holdings accounted for about 52.2% of the portfolio. Index heavyweights like HDFC Bank, Infosys, ICICI Bank, Reliance Industries, and HDFC Ltd. currently find place in the top 5 portfolio holdings. Names like TCS, HCL Technologies, Bajaj Finance, Axis Bank, and Bharti Airtel, etc. are among other stocks that have found place in the core holdings of the fund.
CRBEF's prominent bet on companies like Infosys, Divis Laboratories, Reliance Industries, HDFC Bank, TCS, Gujarat Gas, etc. has turned out to be extremely rewarding for the fund, in the last one year. The gainers in the portfolio have outscored the losers, helping it create significant alpha for investors.
Around one-third of CRBEF's portfolio is exposed to stocks in the Banking and Finance sector. Infotech, Consumption, Petroleum, Pharma, Auto, and Consumer Durables have been the other prominent sectors in the portfolio with an exposure of about 3% to 15% in each, along with diversification to Telecom, Engineering, Cement, Oil & Gas, Retail, Metals, and Healthcare services.
Suitability
CRBEF has evolved in terms of performance by distinctly outperforming the benchmark, as well as most of its large-sized peers even in conditions where many of its popular peers struggled with their performance. The fund appears to be well placed in terms of its process driven portfolio management strategies and has the potential to reward investors willing to stay invested in the fund for stable returns in the long run.
Backed by well-defined investment process and risk management techniques, CRBEF has the ability to timely pick quality names having high growth potential, and deliver market-beating returns in the long run at reasonable level of risk. This makes CRBEF suitable for investors looking for stable returns from investment in large caps with a potential to generate decent alpha over the long term.
Warm Regards,
Divya Grover
Research Analyst
PS: If you wish to invest in a readymade portfolio of top recommended equity mutual funds based on the 'Core & Satellite' approach to investing, I suggest that you subscribe to PersonalFN's Premium Report, "The Strategic Funds Portfolio For 2025 (2021 Edition)". This premium report will help you build your optimum mutual funds portfolio for 2025 without any effort on your part. If you haven't subscribed yet, do it now!
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.
Join Now: PersonalFN is now on Telegram. Join FREE Today to get ‘Daily Wealth Letter’ and Exclusive Updates on Mutual Funds
DISCLOSURE AS PER SECURITIES AND EXCHANGE BOARD OF INDIA (RESEARCH ANALYSTS) REGULATIONS, 2014
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.
'PersonalFN' is a service brand of QIS and was started in the year 1999. In 1999, the Company registered the Domain name www.personalfn.com for providing information on mutual funds and personal financial planning, financial markets in general, etc. and services related to financial planning and research in various financial instruments including mutual funds, insurance and fixed income products to customers. It offers asset allocation and researched investment recommendations through its financial planning services.
Quantum Information Services Private Limited (QIS) is registered as Investment Adviser under SEBI (Investment Adviser) Regulations, 2013 and having Registration No.: INA000000680. In terms of the second proviso to Regulation 3 (1) of SEBI (Research Analysts) Regulations, 2014 the Company is not required to obtain Certificate of registration from SEBI.
Disciplinary history
There are no outstanding litigations against the Company, its subsidiaries and its Directors.
Terms and condition on which its offer research report
For the terms and condition for research report click here.
Details of associates
-
Money Simplified Services Private Limited;
-
PersonalFN Insurance Services India Private Limited;
-
Equitymaster Agora Research Private Limited;
-
Common Sense Living Private Limited;
-
Quantum Advisors Private Limited;
-
Quantum Asset Management Company Private Limited;
-
HelpYourNGO.com India Private Limited;
-
HelpYourNGO Foundation;
-
Natural Streets for Performing Arts Foundation;
-
Primary Real Estate Advisors Private Limited;
-
HYNGO India Private Limited;
-
Suresh Lulla;
-
I V Subramaniam.
Disclosure with regard to ownership and material conflicts of interest
-
‘subject company’ is a scheme on which a buy/sell/hold view or target price is given/changed in this Research Report;
-
Neither QIS, it's Associates, Research Analyst or his/her relative have any financial interest in the subject Company;
-
Neither QIS, it's Associates, Research Analyst or his/her relative have actual/beneficial ownership of one per cent or more securities of the subject Company, at the end of the month immediately preceding the date of publication of the research report;
-
Neither QIS, it's Associates, Research Analyst or his/her relative has any other material conflict of interest at the time of publication of the research report except that QIS (PersonalFN) is, as per SEBI (Mutual Funds) Regulations 1996, an associate / group Company of Quantum Asset Management Company Private Limited and Trustees and Sponsor of Quantum Mutual Fund (QMF) and to that extent there may be conflict of interest while recommending any schemes of QMF. However, any such recommendation or reference made is based on the standard evaluation and selection process, which applies uniformly for all Mutual Fund Schemes. The payment of commission (upfront / annualized & trail), if any, for any Schemes by QMF to QIS (PersonalFN) is also at arm's length and as per prevailing market practices.
Disclosure with regard to receipt of Compensation
-
Neither QIS nor it's Associates have received any compensation from the subject Company in the past twelve months;
-
Neither QIS nor it's Associates have managed or co-managed public offering of securities for the subject Company;
-
Neither QIS nor it's Associates have received any compensation for investment banking or merchant banking or brokerage services from the subject Company;
-
Neither QIS nor it's Associates have received any compensation for products or services other than investment banking or merchant banking or brokerage services from the subject company in the past twelve months.
-
Neither QIS nor it's Associates have received any compensation or other benefits from the subject Company or third party in connection with the research report
General disclosure
-
The Research Analyst has not served as an officer, director or employee of the subject Company.
-
QIS or the Research Analyst has not been engaged in market making activity for the subject Company.
Click here to read PersonalFN's Mutual Fund Rating Methodology
Subject Company means Mutual Fund Schemes
Quantum Information Services Private Limited CIN: U65990MH1989PTC054667 Regd. & Corp. Office: 103, Regent Chambers, 1st Floor, Nariman Point, Mumbai - 400 021
Email:info@personalfn.com Website: www.personalfn.com Tel.: 022 61361200 Fax.: 022 61361222 SEBI-registered Investment Adviser. Registration No. INA000000680, SEBI (Investment Advisers) Regulation, 2013