Large-cap focus, diversification pay off
Launched in 2003, Canara Robeco Equity Diversified Fund has featured in the top 30 percentile of the multicap category of the CRISIL Mutual Fund Ranking (CMFR) over the past three quarters ended March 2020.
The fund has been managed by Shridatta Bhandwaldar and Miyush Gandhi since July 2016 and October 2019, respectively. The month-end assets under management (AUM) of the fund have more than doubled over the past three years, from ~786 crore in May 2017 to ~1,897 crore in April 2020. The investment objective of the scheme is to generate capital appreciation by investing in equity and equity-related securities.
Leading returns
The fund has consistently outperformed the benchmark (S&P BSE 500 TRI) and its peers (funds ranked in the multi-cap funds category in March 2020 CMFR) in all the trailing periods under analysis. An investment of ~10,000 in the fund on August 1, 2006, (inception of the benchmark) would have grown to ~51,154 on May 15, 2020, at an annualised rate of 12.56 per cent, as compared with the category and the benchmark that would have grown to ~41,753 (10.91 per cent per annum) and ~35,562 (9.63 per cent per annum), respectively.
Systematic investment plan (SIP) is a disciplined mode of investing offered by mutual funds through which one can invest a certain amount at regular intervals. A monthly investment of ~10,000 for the last 10 years in the fund, totalling ~12 lakh, would have grown to ~18.05 lakh (7.99 per cent annualised returns) compared with ~16.11 lakh (5.8 per cent annualised returns) in the benchmark as on May 15, 2020.
Portfolio analysis
Over the past three years, the fund took exposure across market caps with a predominant allocation to large-cap stocks. Exposure to large-cap stocks averaged 71.98 per cent during this period, while exposure to mid-cap and small-cap stocks averaged 16.12 per cent and 7.9 per cent, respectively.
The portfolio was diversified across 31 sectors over the past three years. Banks had the highest average allocation of 23.78 per cent, followed by consumer non-durables (9.97 per cent), finance (8.57 per cent), software (7.49 per cent), and construction project (5.92 per cent).
The fund invested in 129 stocks over the past three years and consistently held 15 stocks. Of the consistently held stocks, nine outperformed the fund’s benchmark during the period under analysis. Reliance Industries, HDFC Bank, and Kotak Mahindra Bank were the major contributors to the fund’s performance and were also consistently held during the period under analysis. Other major contributors included Hindustan Unilever and Britannia Industries.