Canara Robeco Bluechip Equity Fund: Showcasing Resilience in Bearish Phases

Canara Robeco Bluechip Equity Fund is a prudently managed Large Cap Fund that has a past track record of performing consistently well across various market phases by focusing on quality stocks and risk management techniques.

Canara Robeco Bluechip Equity Fund is a prudently managed Large Cap Fund that has a past track record of performing consistently well across various market phases. Launched in August 2010, the fund has a track record of well over 14 years, during which its NAV has grown at a CAGR of 15.5%. During bullish market phases, it has often managed to generate nearly in line with the benchmark BSE 100 - TRI index. But Canara Robeco Bluechip Equity Fund's strength lies in its ability to stand strong during bearish market phases by limiting losses.

The fund managers' strategy of sticking to index heavyweights that have been driving the index over the last few years has turned in its favour. Moreover, its focus on risk mitigation has paid off, rewarding investors with superior returns over the long run. During the 2020 market crash, Canara Robeco Bluechip Equity Fund managed to limit the downside, generating an alpha of over 7.5 percentage points when compared to the index. However, the fund has slightly trailed the benchmark and some of its peers in the recent bull phase.

Over the last 5-years, Canara Robeco Bluechip Equity Fund has registered a compounded annualised growth of around 18.2%, as against about 17.1% CAGR delivered by its benchmark BSE 100 - TRI index. An investment of Rs 10,000 in the fund five years back would have now appreciated to Rs 23,042, compared to a valuation of Rs 22,016 in its benchmark.

Canara Robeco Bluechip Equity Fund has established a track record of credible performance across time frames and has suitably rewarded its long-term investors. The fund witnessed a muted growth in the recent bull phase which started in the latter half of 2020. However, it has shown resilience amid the sharp volatility and market correction witnessed over the past couple of months, outpacing the benchmark and majority of its peers. On a rolling return basis in the last 1-year and 2-year period, Canara Robeco Bluechip Equity Fund has outperformed the benchmark by 1.5-2 percentage points. Over the longer 5-year and 7-year periods, it stands among the top performers in the category and much ahead of the benchmark.

This outperformance has come at a far reasonable risk when compared to the benchmark and the category average. Canara Robeco Bluechip Equity Fund's Standard Deviation (13.13%, annualised) is lower than its benchmark as well as the category average, whereas it also fares better in terms of risk-adjusted returns as denoted by its Sharpe ratio (0.16).

What is the investment strategy of Canara Robeco Bluechip Equity Fund?

Categorised under Large-cap funds, Canara Robeco Bluechip Equity Fund is mandated to invest a minimum of 80% of its assets in large-cap stocks. Accordingly, it focuses on bluechip companies and invests in stocks of companies figuring in the list of top 100 companies based on market capitalisation. While selecting stocks for the portfolio, the fund focuses on companies and sectors that are expected to perform better than the general market and uses inputs from the internal quant model to identify investable companies. Canara Robeco Bluechip Equity Fund follows a blend style of investing i.e. it looks for high-growth stocks available at fair valuation and stays invested for a long term.

The fund manager gives weightage to competent management, robust business fundamentals, and reasonable valuations. The fund manager aims to invest in large-sized companies with an established business presence, good reputation, and solid brand equity. Canara Robeco Bluechip Equity Fund usually holds a well-diversified portfolio of about 50-60 stocks in its portfolio and follows a buy-and-hold investment strategy, which reflects the strong long-term conviction the fund management has when it picks stocks for the portfolio. The fund had a reasonable turnover ratio in the range of 20-25% in the last one year.

As of December 31, 2024, Canara Robeco Bluechip Equity Fund held 56 stocks in its portfolio spread across sectors. The top 10 stock holdings accounted for about 45.6% of the portfolio. Index heavyweights like HDFC Bank, ICICI Bank, Infosys, Reliance Industries, and Bharti Airtel currently find a place in the top 5 portfolio holdings. L&T, Mahindra & Mahindra, SBI, ITC, and Ultratech Cement are among other stocks that have found a place in the core holdings of the fund's portfolio. Many of these stocks have been part of the fund's top holding for over two years now.

Canara Robeco Bluechip Equity Fund's bet on names like ICICI Bank, Bharti Airtel, L&T, Max Healthcare Institute, Bharat Electronics, Sun Pharma, Infosys, and Ultratech Cement turned out to be rewarding for the fund in the last 2 years. The Indian Hotels Company, NTPC, ABB India, SBI, ITC, United Spirits, and Bajaj Auto were among the other stocks that contributed significantly to its gains.

Among sector holdings, Canara Robeco Bluechip Equity Fund's portfolio is primarily exposed to the Banking and Finance sector having a combined allocation of around 29%. Infotech, Consumption, Engineering, Pharma, and Auto are among the other prominent sectors in the portfolio with an exposure of about 6% to 12% in each. It also holds diversification to Petroleum, Telecom, Retail, and Power among others. The top 5 sectors in the fund's portfolio together account for around 58% of its assets.

Is Canara Robeco Bluechip Equity Fund suitable for my investment goals and risk tolerance?

Canara Robeco Bluechip Equity Fund has already shown the potential to generate reasonable gains during market uptrends and distinctly outperforming the benchmark, as well as most of its large-sized peers in depressed market conditions. The fund appears to be well placed in terms of its process-driven portfolio management strategies and is well capable of rewarding investors willing to stay invested in the fund for stable returns in the long run.

Backed by a well-defined investment process, Canara Robeco Bluechip Equity Fund has the ability to timely pick quality names having high growth potential, and deliver market-beating returns in the long run. The fund's prudent risk management strategies can help it deal with the market volatility going ahead.

Canara Robeco Bluechip Equity Fund is suitable for investors looking for a well-managed Large Cap Fund with steady growth potential and having a long-term view of at least 5 years.

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Note:  This write up is for information purpose and does not constitute any kind of investment advice or a recommendation to Buy / Hold / Sell a fund. Returns mentioned herein are in no way a guarantee or promise of future returns. As an investor, you need to pick the right fund to meet your financial goals. If you are not sure about your risk appetite, do consult your investment consultant/advisor. Mutual Fund Investments are subject to market risks, read all scheme related documents carefully. Registration granted by SEBI, Membership of BASL and certification from NISM no way guarantee performance of the intermediary or provide any assurance of returns to investors.

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DIVYA GROVER is the co-editor for FundSelect, the flagship research service of PersonalFN. She is also the co-editor of DebtSelect. Divya is an avid reader which helps her in analysing industry trends and producing insightful articles for PersonalFN’s popular newsletter – Daily Wealth letter, read by over 1.5 lakh subscribers.
Divya joined PersonalFN in 2019 and has since then used stringent quantitative and qualitative parameters to analyse funds to provide honest and unbiased research to investors. She endeavours to enable investors to make an informed investment decision and thereby safeguard their wealth.

Disclaimer: Investment in securities market are subject to market risks, read all the related documents carefully before investing.
This article is for information purposes only and is not meant to influence your investment decisions. It should not be treated as a mutual fund recommendation or advice to make an investment decision in the above-mentioned schemes.

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Quantum Information Services Private Limited (QIS) was incorporated on December 19, 1989.

QIS was promoted by Mr Ajit Dayal with an objective of providing value-based information/views on news related to equity markets, the economy in general, sector analysis, budget review and various personal products and investments options available to the Public. It was the first company to start equity research on an institutional level.

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