Mutual Funds

Canara Robeco Emerging Equities: Invest

K. Venkatasubramanian | Updated on December 17, 2011

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Investors can buy units of Canara Robeco Emerging Equities, given its steadily improving performance over the past few years.

Over one-, three and four-year timeframes, the fund has managed to outpace its benchmark – CNX Midcap by one to ten percentage points.

The fund's performance, especially over the past three years, has been quite impressive. Its compounded annual return of 32.5 per cent over the above period places it in the top quartile of mid-cap fund universe.

During this period, the fund has managed to deliver better returns compared with Sundaram Select Midcap, DSPBR Small & Midcap and Franklin India Prima. After falling heavily in the 2008 market correction, the fund bounced back spectacularly in the rally from March 2009 to November 2010, by more than trebling its value and registering the best returns among peers in the mid-cap category.

It has also contained downsides well in the last one year of volatile market.

Being a midcap fund, it may be suitable for investments only for only those with high-risk appetite. Investors may park small sums as a diversifier in the form of systematic investments.

Portfolio and strategy

Canara Robeco Emerging Equities sticks to its mandate of being a midcap fund and invests more than 80-85 per cent of its portfolio in such stocks. Though this may up its risk profile, the fund ensures lower volatility by keeping exposure to most individual stocks to less than five per cent of the portfolio.

While the CNX Midcap fell by 24.8 per cent in the last one year, the fund lost only 16.5 per cent of its NAV over the same period.

The fund was able to participate in the 2009-10 rally by taking exposure to the then momentum sectors of pharma, consumer non-durables, banks and financial institutions. It also had taken strategic exposure to sectors such as textile production and media stocks. In media, the fund has retained exposure to resilient stocks such as Jagran Prakashan and HT Media.

Over the past one year, the fund reduced its weight in the pharma space and instead upped holding in select cement and construction stocks. This appears to be a valuation call. However, this also means risking entry into sectors that have been languishing for prolonged periods.

Published on December 17, 2011

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