In times of turbulent equity markets, it can prove rewarding if your portfolio is well placed to tide over volatility. Even during such times returns can be optimised by careful stock picking.

Invesco India Growth Opportunities Fund is one such fund that aims to perform well across market phases by selecting stocks without any style or sector bias.

The fund was earlier know as Invesco India Growth Fund and was categorised as a multi-cap fund. It has now been categorised as Large & Midcap Fund.

Launched in August 2007, the fund has a total asset under management of Rs 1,658 crore as on August 31, 2019. The scheme is managed by Mr Taher Badshah and Mr Amit Ganatra.

Investment objective: Invesco India Growth Opportunities Fund aims to generate capital appreciation from a diversified portfolio of predominantly Equity and Equity Related Instruments of Large and Midcap companies.

Graph 1:  Growth of Rs 10,000, If Invested In IIGOF 5 Years Ago

Had you invested Rs 10,000 in IIGOF five years back on September 18, 2019, it would have grown to Rs 17,201 as on September 18, 2019. This translates into compounded annualised growth rate of 11.46%. In comparison, a simultaneous investment of Rs 10,000 in its benchmark S&P BSE Large Midcap 65:35 – TRI would now be worth Rs 14,913 (a CAGR of 8.32%). As can be seen in the chart alongside, the fund has generated substantial lead over the benchmark in the last five years.

Graph 2:  IIGOF Year-on-Year Performance

Launched in August 2007, IIGOF has a track record of over 12 years. The year-on-year performance comparison of the fund vis-a-vis its benchmark S&P BSE 250 LargeMidcap 65:35 – TRI shows that the fund outperformed the benchmark in 6 out of the last 10 calendar years. Majority of alpha was generated in CY 2013. The fund managed to cushion the downside in CY 2011 and CY 2018 and has done well to contain the downside in the current year as well.

Table 1: IIGOF Performance vis-à-vis category peers

Scheme name Corpus (Cr.) 1 year (%) 2 year (%) 3 year (%) 5 year (%) Std Dev Sharpe
Mirae Asset Emerging Bluechip 7,759 2.53 11.48 18.07 25.36 15.04 0.10
LIC MF Large & Midcap Fund 509 -1.63 9.01 15.46 NA 14.19 0.07
Canara Rob Emerg Equities Fund 4,668 -3.43 9.54 15.26 24.12 16.14 0.04
Invesco India Growth Opp Fund 1,658 1.71 13.09 14.94 16.89 13.10 0.09
Sundaram Large and Mid Cap Fund 721 1.98 11.71 14.79 16.94 13.49 0.07
Principal Emerging Bluechip Fund 2,057 -6.80 7.62 14.61 21.17 15.66 0.00
Essel Large & Midcap Fund 100 -0.30 7.60 14.19 NA 14.61 0.03
IDFC Core Equity Fund 2,678 -2.94 7.89 13.59 13.86 13.70 0.00
Kotak Equity Opp Fund 2,488 0.17 8.03 13.41 16.47 13.09 0.03
DSP Equity Opportunities Fund 5,166 -2.67 7.25 13.24 16.19 14.03 0.01
Edelweiss Large & Mid Cap Fund 429 -0.11 10.42 11.74 14.34 13.10 0.02
ICICI Pru Large & Mid Cap Fund 3,457 -1.28 6.20 11.66 12.30 12.38 -0.03
SBI Large & Midcap Fund 2,493 0.22 8.95 11.51 15.90 13.73 -0.01
Tata Large & Mid Cap Fund 1,378 2.06 8.16 11.04 14.99 12.71 0.01
Aditya Birla SL Equity Advantage Fund 4,708 -7.96 3.90 10.72 16.44 15.81 -0.05
L&T Large and Midcap Fund 1,274 -7.74 5.54 10.54 13.89 14.57 -0.01
Quant Large & Mid Cap Fund 4 -5.12 3.29 10.51 19.23 12.88 -0.06
HDFC Growth Opp Fund 1,231 -0.81 6.18 9.14 8.43 13.53 -0.03
UTI Core Equity Fund 833 -4.84 5.32 8.75 11.58 13.68 -0.07
Franklin India Equity Advantage Fund 2,467 -2.72 6.11 8.74 14.05 12.75 -0.06
BOI AXA Large & Mid Cap Equity Fund 153 -11.67 4.14 8.06 10.36 16.45 -0.04
Reliance Vision Fund 2,606 -8.78 2.27 7.17 12.10 16.35 -0.08
S&P BSE 250 LargeMidCap 65:35 – TRI -1.35 9.30 12.65 14.33 13.80 0.01

Returns are on a rolling basis and in %, calculated using Direct Plan – Growth option. Those depicted over 1-Yr are compounded annualised.
Data as on September 18, 2019
(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.

In terms of performance, IIGOF outperformed the benchmark and average category peers across rolling periods. The fund’s performance in the 1-year rolling period is noteworthy as most of its peers struggled to generate positive returns.

IIGOF found place among the top 5 performers on a 3-year rolling return basis. Mirae Asset Emerging BluechipLIC MF Large & Midcap Fund and Canara Rob Emerg Equities Fund were the other top performers in the category.

In terms of risk-return parameters, IIGOF undertook lower risk as compared to benchmark and many of its peers and it managed to reward investors with superior risk-adjusted returns.

Investment strategy of IIGOF

Classified under Large and Midcap Funds, IIGOF is mandated to invest predominantly in equity and equity related instruments of large and mid cap companies, with minimum 35% allocation to each. The fund aims to generate consistent outcomes in all market conditions and to achieve that, it invests in a combination of growth and value stocks without any specific sector bias. While picking stocks, the fund adopts top-down approach to identify attractive looking sectors and bottom-up approach to select high growth stocks within those sectors.

Graph 3: IIGOF Portfolio Allocation And Market Capitalisation Trend

IIGOF is mandated to invest at least 35% of its assets each in equity and equity related instruments of large cap companies and simultaneously maintain minimum 35% allocation in mid caps as well. Accordingly, the fund maintains a large cap bias and invests 58-60% of its assets in equities of large cap companies. It maintains around 35% of its assets in mid cap stocks. The fund has a marginal allocation of up to 2% in small caps. The balance of its holdings is maintained in the form of cash.

Graph 4:  IIGOF Top Portfolio Holdings

Holding (in %) as on August 31, 2019
(Source: ACE MF)

IIGOF held 47 stocks in its portfolio as on August 31, 2019, diversified across various sectors. The top 10 stocks constitute 39.5% of the total holdings. HDFC Bank has the highest allocation of 7.8% in the portfolio, followed by Reliance Industries (5.5%) and ICICI Bank (5%). Rest of the stocks in the top 10 holdings have allocation of around 2.5-4% each.

In terms of sector wise holdings, the fund has the maximum exposure to Banks at 19.9%. Consumer Non Durables and Finance follow with allocation of 11.5% and 9.5%, respectively. Infotech (9.2%) and Engineering (6.7%) too find place among the top preferred sectors. Pharmaceuticals, Petroleum Products, Auto Ancillaries, Oil & Gas and Cement are the other prominent sectors in the fund’s portfolio.

Top Contributors

Among the stocks in the fund’s portfolio, ICICI Bank contributed the most to its gains in the last one year with a weighted return of 0.9%. Bajaj Finance, Apollo Hospitals Enterprise and HDFC Bank were the other top contributors to the returns.

The stocks that eroded its gains the most were RBL Bank, Maruti Suzuki India, Mahindra & Mahindra and National Aluminium Company, Exide Industries, Motherson Sumi Systems and Sun Pharma.

Suitability of IIGOF

IIGOF invests around 95% of its portfolio in equities with majority of it invested in equities of large cap companies. It also allocates a significant portion of its portfolio in equities of mid cap companies. Large caps can enable appreciation of capital with an element of stability, while mid caps can boost the portfolio returns but with a higher degree of risk.

Thus it is suitable for investors with moderately high risk appetite and an investment horizon of at least 5 years.

IIGOF has performed well across periods and outpaced many of its peers and the benchmark. It has managed to contain the downside even as the equity markets remained volatile and has the potential to continue with its superior long term performance.

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.

This article first appeared on PersonalFN here.

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