Large & Mid Cap Mutual Funds are mandated to invest a minimum of 35% of their assets each in equity and equity-related instruments of large-cap and mid-cap companies. When you invest in Large & Midcap Funds you get the opportunity to benefit from the stability of large-caps and the high growth potential of mid-caps through a single fund.
Ensure that you invest only in the best schemes in the category to get the most out of your investment. Click here to find out of PersonalFN’s list of the best Large & Midcap Mutual Funds to invest in 2023.
Canara Robeco Emerging Equities Fund is a popular scheme in the Large & Midcap Fund category that has recorded superior performance across most time periods and has created ample wealth for its long-term investors.
Graph 1: Growth of Rs 10,000 if invested in Canara Robeco Emerging Equities Fund 5 years ago
Past performance is not an indicator of future returns
Data as on January 24, 2022
(Source: ACE MF)
Canara Robeco Emerging Equities Fund is one of the popular schemes in the Large & Midcap Fund category that carries a successful track record of nearly 18 years to its credit. With a well-balanced allocation across large-cap and mid-cap stocks, Canara Robeco Emerging Equities Fund offers the benefit of diversification to its investors. The fund endeavours to identify and invest in companies having the potential to grow as big or even bigger than their global counterparts. The fund follows a mix of the top-down and bottom-up approach to pick quality and high-growth stocks that have the potential to become future leaders.
Over the last five years, Canara Robeco Emerging Equities Fund has generated compounded annualised returns of around 11.4%, which is nearly in line with the returns generated by its benchmark Nifty LargeMidcap 250 – TRI index. While the fund has recorded superior growth during the past mid and small cap rallies when its portfolio was biased towards mid and small-caps, it has fared well even under its current Large & Midcap mandate. Canara Robeco Emerging Equities Fund has proven its ability to generate market-beating returns in the long run and has the potential to reward its investors with active long-term wealth creation.
Table: Canara Robeco Emerging Equities Fund’s performance vis-á-vis category peers
|Quant Large & Mid Cap Fund
|Mahindra Manulife Top 250 Nivesh Yojana
|ICICI Pru Large & Mid Cap Fund
|HDFC Large and Mid Cap Fund
|SBI Large & Midcap Fund
|Mirae Asset Emerging Bluechip
|Edelweiss Large & Mid Cap Fund
|UTI Core Equity Fund
|Canara Rob Emerg Equities Fund
|Axis Growth Opp Fund
|NIFTY LargeMidcap 250 – TRI
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 January 24, 2023
(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 of future returns. The percentage returns shown are only for indicative purposes.
Canara Robeco Emerging Equities Fund is a top quartile performer and has delivered substantial returns over its benchmark and the category average across various time periods in the past. The fund has recorded superior long-term performance and stands strong in the list of prime contenders in the Large & Midcap Fund category. Over the longer 3-year, 5-year, and 7-year time period, the fund has outperformed many of its peers, while its performance has been reasonable compared to the benchmark.
Despite being an aggressively managed fund with a significant allocation to mid-caps, Canara Robeco Emerging Equities Fund has registered reasonable volatility that is far lower than the benchmark, and some of its prominent category peers. The fund is well capable of generating sound returns that compensates investors with superior risk-adjusted returns as denoted by its Sharpe ratio, which is among the best in the category.
Investment strategy of Canara Robeco Emerging Equities Fund
Categorised under Large & Midcap funds, Canara Robeco Emerging Equities Fund is mandated to hold at least 35% of its assets in large caps, with a simultaneous allocation of at least 35% in mid-cap stocks. It holds a well-diversified portfolio of 50 to 60 stocks.
Canara Robeco Emerging Equities Fund is a growth-oriented fund, where the fund manager looks for high-growth companies (across sectors) with the ability to generate capital and backed by good management. The fund manager gives high emphasis to BMV (Business, Management and Valuation). Accordingly, while evaluating companies, the fund manager emphasises on its qualitative features, management, and governance. He also looks at quantitative parameters by analysing the balance sheet and use valuation to determine the weight i.e., underweight / overweight position in stocks.
The core focus of the fund is on cash flow generating businesses. For the purpose of investment, the fund prefers companies with low P/E ratio (as compared to the industry P/E), consistent growth potential, operating in niche businesses with high and increasing profit margin, huge untapped market potential, research-driven companies, scope for value added services, scope for increasing P/E to Growth, and so on.
The fund managers follow a mix of the top-down and bottom-up approach to investing, and looks at macros to identify favourable sectors, and pick best companies from the sector. They pick high-growth stocks from the eligible universe of companies in the large and mid-cap space and makes well use of diversification to manage downside risk. The fund focuses on a long-term investment strategy and accordingly, it has a reasonable turnover ratio of around 30% to 40%.
Graph 2: Top portfolio holdings in Canara Robeco Emerging Equities Fund
Holding in (%) as of December 31, 2022
(Source: ACE MF)
As of December 31, 2022, Canara Robeco Emerging Equities Fund held a well-diversified portfolio of 57 stocks diversified across market caps and sectors. The fund held its top exposure in large-cap names like HDFC Bank, ICICI Bank, Infosys, SBI, and Axis Bank. The top 10 holdings in the fund’s portfolio together account for about 40% of the total assets. The fund manager avoids taking an exposure of more than 2%-2.5% in single mid-cap stock due to liquidity concerns associated with stocks in the broader market.
In the last 2 years, Canara Robeco Emerging Equities Fund has benefitted immensely from its exposure to stocks like ICICI Bank, UNO Minda, Polycab India, Axis Bank, Cholamandalam Investment & Finance Co., Bharti Airtel, Reliance Industries, Aditya Birla Fashion and Retail, and Infosys, among others. On the other hand, Whirlpool of India, Gland Pharma, Ipca Laboratories, and Kansai Nerolac Paints were among the stocks that eroded some of its gains.
Canara Robeco Emerging Equities Fund’s portfolio is skewed towards Financials, with Banks carrying around 24.5% weightage in the portfolio, with another 6.5% in Finance stocks, followed by Engineering, Auto & Auto Ancillaries, Infotech, Consumption, Pharma, Chemicals, Cement, Retail, and Petroleum having an allocation of around 3%-11% each.
Canara Robeco Emerging Equities Fund has not only outperformed the benchmark and its peers across bull market rallies, but has fared well in the bear market phases too. With this the fund has managed to consistently generate superior returns across most market cycles it has witnessed so far.
Backed by strong management systems and processes, the fund has delivered promising returns for its investors over longer time periods. Canara Robeco Emerging Equities Fund maintains a well-diversified portfolio of stocks spread across sectors and balanced across the large-cap and mid-cap segments. The mix of top-down and bottom-up approach helps the fund manager shift to favourable-looking sectors while picking quality high-growth stocks from the sector, thus helping it generate higher alpha for investors.
Canara Robeco Emerging Equities Fund is suitable for investors looking for a well-managed scheme in the Large & Midcap Fund category with an investment horizon of at least 5-7 years.
This article first appeared on PersonalFN here