Mutual Funds

Canara Robeco Bluechip Equity: Stable returns in the long run

Yoganand D | Updated on February 09, 2020 Published on February 08, 2020

The fund is best suited for investors with a time horizon of more than five years

The recent slide in the Sensex as well as the Nifty could provide investment opportunities in large-cap funds.

Investors can buy the units of the Canara Robeco Bluechip Equity (formerly Canara Robeco Large Cap+), a large-cap fund that provides stable returns in the long term.

The scheme invests at least 80 per cent of its assets in stocks with large market capitalisation, and is best suited for investors with an investment time horizon of more than five years.

Over the past three- and five-year periods, the fund has delivered 14 per cent and 8.6 per cent, respectively, beating its benchmark, the S&P BSE 100 TRI’s returns of 12.5 per cent and 7.8 per cent.

Moreover, it has also outpaced the large-cap category average returns of 11.9 per cent and 7.2 per cent in the past three and five years, respectively. In the last one-year period, Canara Robeco Bluechip Equity has clocked 18.9 per cent, beating the benchmark and the category by more than 6 percentage points.

Considering the current market correction and volatility, investors can opt to buy the units of the fund through the systematic investment plan (SIP) route.

The fund can be part of the core portfolio of investors.

Performance and strategy

Canara Robeco Bluechip Equity is a four-star rated by our BusinessLine Portfolio Star Track MF Rating.s It has been the top-quartile fund among the schemes in the large-cap category.

It has outclassed some of its large-cap peers such as Nippon India Large Cap, SBI Bluechip and UTI Mastershare across all time-frames.

The fund follows a buy-and-hold approach with less churning of its stock portfolio. It holds a blend of growth and value stocks in its portfolio. It cherry-picks the stocks and sectors that are expected to perform better than the general market.

It follows s three-step investment processes — competent management, robust business fundamentals and reasonable valuations.

The portfolio of the fund is well-diversified and holds about 82 per cent in large-cap stocks, while the mid- and small-cap stock share is 10.7 per cent and 1.7 per cent, respectively (as of December 2019).

The fund has a nearly focussed portfolio with 40 stocks; the top 10 stocks constitute 53.5 per cent of the portfolio. The top five sectors take up 65.6 per cent, with banks taking the larger share with 25 per cent of the allocation.

Strong performance by the private banks such as HDFC Bank, ICICI Bank and Kotak Mahindra Bank over the past year has boosted the fund’s performance. It has upped its allocations in the software, pharma and petroleum sectors in recent times, while reducing the exposure to the cement, construction projects and gas sectors.

Recently, it added services and auto ancillary to the portfolio. It completely exited the ferrous metal sector in July last year.

Some of the stocks recently added to the basket are Shree Cement, Indian Railway Catering and Tourism Corporation, Jubilant FoodWorks, Motherson Sumi Systems, Bajaj Finserv and HDFC Asset Management Company.

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Published on February 08, 2020
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