Welcome to  PersonalFN’s weekly analysis on diversified equity mutual funds! In this issue, we have analysed Canara Robeco Bluechip Equity Fund, highlighting its performance, peer comparison, investment strategy, fundamentals, portfolio, and suitability.

Canara Robeco Bluechip Equity Fund is a prudently managed Large Cap Mutual Fund that has a past track record of performing consistently well across various market phases, but has disappointed investors in the current bull phase. The fund still holds an encouraging long-term performance record.

What is the growth of Rs 10,000 invested in Canara Robeco Bluechip Equity Fund five years ago?

Past performance is not an indicator of future returns
Data as of May 08, 2024
(Source: ACE MF, data collated by PersonalFN) 

Launched in August 2010, Canara Robeco Bluechip Equity Fund has a past record of performing consistently well across various market phases. The fund registered strong performance on multiple occasions in the past, especially between 2018 and 2020, which helped it make it to the list of category outperformers. Its superior long-term track record also helped it to get the attention of investors; its corpus has nearly doubled in the last two years.

Canara Robeco Bluechip Equity Fund has flourished under the supervision of its experienced fund manager, Mr Shridatta Bhandwaldar (Head – Equities). 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. Notably, Canara Robeco Bluechip Equity Fund has underperformed in the current bull phase which started in the latter half of 2020. This has impacted its returns in the short to medium term. However, over the long-term time frames, the fund still figures among the top performers in the category.

Over the last 5-years, Canara Robeco Bluechip Equity Fund has registered a compounded annualised growth of around 19.3%, as against the 16.9% CAGR delivered by its benchmark S&P BSE 100 – TRI index. Clearly, Canara Robeco Bluechip Equity Fund’s remarkable long-term performance, supported by its ability to limit the downside, helped it find a space in the list of prime contenders in the Large Cap Fund category.

How has Canara Robeco Bluechip Equity Fund performed on a rolling return basis?

Scheme Name	Corpus (Cr.)	1 Year	2 Year	3 Year	5 Year	7 Year	Std Dev	Sharpe
Nippon India Large Cap Fund	26,138	30.48	20.09	27.86	16.60	16.37	14.01	0.41
HDFC Top 100 Fund	32,355	26.49	17.16	24.45	15.08	14.60	13.52	0.35
ICICI Pru Bluechip Fund	53,505	25.49	15.59	23.17	16.10	15.53	12.60	0.36
Aditya Birla SL Frontline Equity Fund	26,878	21.35	12.12	20.79	14.21	13.40	13.21	0.28
SBI BlueChip Fund	45,411	20.66	12.49	20.73	15.19	13.86	12.83	0.25
Kotak Bluechip Fund	7,901	21.04	11.86	20.50	15.98	14.68	13.29	0.27
Canara Rob Bluechip Equity Fund	12,830	21.04	11.25	19.27	17.06	16.33	12.81	0.26
UTI Large Cap Fund	12,483	17.96	9.13	18.76	14.35	13.85	13.43	0.22
Mirae Asset Large Cap Fund	37,885	17.35	9.82	18.69	14.44	14.92	12.92	0.23
Axis Bluechip Fund	33,523	15.67	5.66	14.32	13.62	15.01	13.97	0.17
S&P BSE 100 – TRI		20.30	12.10	20.44	14.75	14.67	13.83	0.26

The securities quoted are for illustration only and are not recommendatory.
Returns are on a rolling basis and in %. Direct Plan-Growth option. Those depicted over 1-Yr are compounded annualised. Risk ratios are calculated over a 3-year period assuming a risk-free rate of 6% p.a.
Data as of May 08, 2024
(Source: ACE MF, data collated by PersonalFN)
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 before investing. Past performance is not an indicator for future returns. The percentage returns shown are only for indicative purposes.

Even though Canara Robeco Bluechip Equity Fund may underperform the benchmark and some of its peers in the short run, its long-term performance is encouraging. In the last 1-year and 3-year period, Canara Robeco Bluechip Equity Fund has trailed many of its prominent peers by a notable margin. This has impacted its returns in the short to medium term. Nonetheless, over the longer time frame of 5 years and 7 years, the fund has outpaced the benchmark as well as the category average by around 1.5-2.5 percentage points on a rolling returns basis.

The volatility registered by the fund is far more reasonable when compared to the benchmark and the category average. The fund’s Standard Deviation (12.81%, annualised) is much lower than its benchmark as well as the category average, whereas its Sharpe (0.26) is nearly in line with the benchmark and the category average.

[Read: Do Large Cap Funds Make More Sense in An Overheated Equity Market?]

What is the investment strategy of Canara Robeco Bluechip Equity Fund?

Categorised under Large-cap funds, 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. The fund manager gives higher weightage to companies with 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 45-55 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 of around 20% in the last one year.

What are the top portfolio holdings in Canara Robeco Bluechip Equity Fund?

Holding in (%) as of April 30, 2024
(Source: ACE MF, data collated by PersonalFN) 

Canara Robeco Bluechip Equity Fund usually holds a fairly diversified portfolio of about 45 to 55 stocks. As of April 30, 2024, the fund held 53 stocks in its portfolio spread across sectors. The top 10 stock holdings accounted for about 46.9% of the portfolio. Index heavyweights like HDFC Bank, ICICI Bank, Reliance Industries, L&T, and Bharti Airtel 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 prominent bet on names like ICICI Bank, L&T, Bharti Airtel, and SBI turned out to be rewarding for the fund in the last 2 years. Bajaj Auto, Axis Bank, NTPC, Tata Motors, Maruti Suzuki India, ABB India, Sun Pharma, ITC, Max Healthcare Institute, and Ultratech Cement were among the other stocks that contributed significantly to its gains.

Among sector holdings, Canara Robeco Bluechip Equity Fund’s portfolio is majorly exposed to the Banking and Finance sector having a combined allocation of around 29.4%. Engineering, Infotech, Auto, Consumption, Petroleum, and Pharma are among the other prominent sectors in the portfolio with an exposure of about 5.5% to 10% in each. It also holds diversification to Telecom, Power, Cement, Retail, Auto Ancillaries, and Healthcare among others. The top 5 sectors in Canara Robeco Bluechip Equity Fund’s portfolio together account for around 58% of its assets.

Is Canara Robeco Bluechip Equity Fund suitable for my investment goals and risk tolerance?

Canara Robeco Bluechip Equity Fund has shown the potential to generate reasonable gains during market uptrends and distinctly outperform the benchmark, as well as most of its large-sized peers during depressed market conditions. The fund appears to be well placed in terms of its process-driven portfolio management strategies and is well capable of rewarding investors willing to stay invested in the fund for stable returns in the long run.

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 capable of generating superior risk-adjusted returns.

Canara Robeco Bluechip Equity Fund is suitable for investors looking for a well-managed Large Cap Fund with high growth potential with a long-term view of at least 5 years.

Watch this video to find out the best Large Cap Mutual Funds for 2024:

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. Registration granted by SEBI, Membership of BASL and certification from NISM no way guarantee performance of the intermediary or provide any assurance of returns to investors.

This article first appeared on PersonalFN here