Mutual Funds

Religare Invesco Business Leaders: Still young, but packs a punch

Anand Kalyanaraman | Updated on January 20, 2018


The fund has beaten its benchmark during market ups and downs

It is small, relatively young (less than seven years old) and generally under the radar. But Religare Invesco Business Leaders Fund is scoring where it matters — by consistently beating its benchmark, the Nifty 50, as well as the category average of large-cap funds. Like most of its ilk, the fund, too, has slipped over the past year.

But at a 10 per cent fall, its loss is lesser than that of the benchmark and the category average. The fund has consistently maintained a healthy lead over the benchmark, both during market upsides and downsides. On a one-year daily rolling return basis, Religare Invesco Business Leaders Fund beat the Nifty 50 almost always last year and 9 times out of 10 in the past three years, an improvement over the 71 per cent record over the past five years.

The fund also ranks in the top quartile among peers. A pure large-cap focus has stood Religare Invesco Business Leaders in good stead. Since its inception in August 2009, the fund’s mid-cap exposure has rarely exceeded 5 per cent; it was much lower for the most part.

With the chunk of its portfolio in large-cap stocks, the fund may not be the fastest in the pack in raging bull markets, but it’s no pushover either and delivers a credible performance. For instance, in the market rally between August 2013 and January 2015, the fund’s returns were 74 per cent; the Nifty 50 rose 64 per cent. Capping losses and participating in upsides help Religare Invesco Business Leaders deliver handsomely in the long run. It is a good fit for those seeking to play it relatively safe in iffy times while staying invested to capture potential upsides.

Smart sector calls

The fund remains nearly fully invested in equities (95-99 per cent of the portfolio), with some exposure to cash and cash equivalents.

It restricts itself to 30-35 stocks. Its mandate of investing in stocks of industry leaders means that the fund has a size, growth and quality focus, even if the stock does not necessarily come cheap.

This has worked well. Stocks such as HDFC, Maruti and TCS that have been held for long have paid off handsomely, doubling to tripling over five years. Of the 33 stocks in the fund’s portfolio, just 2 have declined over five years.

The fund has also benefited from timely sector rotation — for instance, over the last year, it allocated more to software companies while paring stake in banking stocks.

Published on March 13, 2016

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