Swapnil Suvarna suggest your investors to hold this fund as a core holding considering its consistency in performance across various market cycles and management's focus of maintaining a quality portfolio
Launched in September 2003, Canara Robeco Equity Diversified Fund is benchmarked against BSE 200. The fund predominantly follows a bottom-up approach focusing on high quality large caps and fundamentally sound mid-caps which in its opinion are likely to generate capital appreciation over the medium-term. At present, the fund is managed by Soumendra Nath Lahiri.
The fund invests in sector leaders and emerging themes with sustainable business models which have a strong correlation to the growth of the Indian economy. The management follows a blend of growth and value investing. Thus the portfolio is high on liquidity and quality which provide stability in volatile conditions. The fund invests over 60 percent of its assets in top 150 equities by market-cap, while remaining is invested in emerging mid-caps and held in cash. The management has invested at attractive levels in companies primarily on the basis of business fundamentals forecasting their profitability and sustainability of growth in cash profit.
Moreover, the fund management has been biased towards sectors which are driven by consumer demand and which are undergoing structural changes. The management does not shy away from taking smart contrarian calls too. For instance, since November 2010 the fund reduced its exposure in public banks and increased its exposure in cements and telecom. This move helped the fund contain loss during the recent market downfall. Overall, the fund maintains good downside risk at times of uncertainty by having significant holdings in cash. This move helps the fund to make investments in the more liquid large cap space at attractive levels in a sideways market. In addition, the management stays away from aggressively churning the portfolio but cuts its exposure from the underperforming scrips to minimize losses.
Even though the fund was a slow performer in the beginning, it has consistently outperformed its benchmark over various market cycles. Since inception, the fund has delivered CAGR of 23 per cent against the benchmark CAGR of 17 per cent. In the past one year, when the markets were under pressure the fund has exhibited commendable downside protection as it has declined 12 percent against its benchmark which has declined 20 percent.
Period NAV BSE-200 Since Inception 23% 17% 5-years 14% 7% 3-year 17% 7% 1-year -12% -20% 6-month -8% -17% Returns as on September 23, 2011. Returns less than 1 year are absolute, while greater than 1 year is annualised. Source: Accord Fintech
Our View
Overall, the fund scores on its consistency of performance across various market cycles and its major holding in promising large-cap space, which brings long term stability. Also the fund has benefited from the fund management’s focus on maintaining a quality portfolio. Hence we suggest this large- and mid-cap oriented fund as a good investment product to your investors who wish to gain maximum returns in the long term.
