Good Proxy Play, Con­sis­tent Re­turns

BNP Paribas Equity Fund

The Economic Times - - Smart - PORT­FO­LIO CHANGE

As In­dian econ­omy gets into re­cov­ery mode, it makes sense to be in­vested in large-size com­pa­nies. They will be the key ben­e­fi­cia­ries in terms of su­pe­rior earn­ings growth given their mar­ket share, brand re­call and deep-pock­ets. So, it is pru­dent to be in­vested in schemes which have high large cap bias.

For con­ser­va­tive in­vestors, BNP Paribas Equity is a good op­tion with a five-year in­vest­ment hori­zon through SIP route. The scheme is nei­ther ex­ces­sively ag­gres­sive nor too con­ser­va­tive.

There are two fac­tors which worked in favour of the scheme. First, the ten­dency of the fund man­ager Shreyash De­valkar to look for off­beat ideas that serve as proxy play for a theme. For in­stance, to cash in on the wave of ecom­merce, he bought tel­cos such as Bharti Air­tel and Idea Cel­lu­lar. Sec­ond, the fund man­ager’s abil­ity to de­liver con­sis­tent re­turns. It has beaten its cat­e­gory and bench­mark in­dex. In the past three-year and five-year pe­ri­ods, the scheme has given 20.4 % and 13.1% re­turns, while its bench­mark Nifty 50 has given 12.3% and 5.8% re­turns in the same pe­ri­ods. The scheme has also beaten its cat­e­gory by a fair mar­gin.

A fact which needs to be noted is un­like its peers, the scheme has less ex­po­sure to cycli­cals. As econ­omy re­cov­ers, the scheme might lose out on the ben­e­fits of earn­ings growth re­cov­ery of busi­nesses of cycli­cals. Am­buja Ce­ments

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