Canara Robeco Bluechip Equity Fund: Showcasing Stable Long-term Performance

Large Cap Mutual Funds invest in market leaders across diverse industries that have the ability to generate stable returns even during phases of weak economic growth. So, as a mutual fund investor, Large Cap Mutual Funds are a must in your portfolio.

During uncertain and highly volatile market conditions, Large Cap Funds tend to offer stability and witness lower downside risk compared to Mid Cap Funds and Small Cap Funds. Thus, when you invest in Large Cap Mutual Funds, you benefit from the steady growth of capital over the long run without exposing your portfolio to high risk.

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Canara Robeco Bluechip Equity Fund is a rising star in the Large Cap Fund segment that has shown high growth potential and has clearly outpaced many of its giant-sized peers in the last few years.

Past performance is not an indicator of future returns
April 11, 2023
(Source: ACE MF)

Canara Robeco Bluechip Equity Fund holds a superior long-term performance track record and figures among the top quartile performers across various time periods. Even though the fund has trailed the benchmark and some of its prominent peers by a noticeable margin in the last 2-year and 3-year periods, it is not expected to have a lasting impact on its long-term fundamentals. The fund holds high growth potential and has the capability to outpace the benchmark and its prominent category peers over the long term. The fund stands among the top quartile performers over the long-term horizon of 5 years and 7 years and has also generated alpha at a CAGR of about 1.5 to 2 percentage points over the benchmark index.

This outperformance has come at a far reasonable risk when compared to the benchmark and category average. The fund's Standard Deviation (15.24%, annualised) is lower than its benchmark (16.77%) as well as the category average (16.14%). CRBEF ranks high in terms of risk-adjusted returns (as denoted by the Sharpe ratio), which is higher than many of its peers.

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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.

While building its portfolio, Canara Robeco Bluechip Equity Fund follows a 3-Step investment process designed to achieve the investment objective in a disciplined manner, where step 1 is idea generation from the investment universe, followed by step 2 - screening process to shortlist investible ideas, whereas finalising the portfolio in step 3. In the screening process, 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 about 45-50 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 30-45% in the last one year.

Canara Robeco Bluechip Equity Fund usually holds a fairly-diversified portfolio of about 45 to 50 stocks. As of March 31, 2023, the fund held 43 stocks in its portfolio spread across sectors. The top 10 stock holdings accounted for about 53% of the portfolio. Index heavyweights like HDFC Bank, ICICI Bank, Infosys, Reliance Industries, and SBI currently find a place in the top 5 portfolio holdings. Axis Bank, L&T, ITC, TCS, and Bharti Airtel 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 ICICI Bank, L&T, SBI, Bharti Airtel, Reliance Industries, Titan Company, Sun Pharma, and Axis Bank turned out to be rewarding for the fund in the last 2 years. HDFC Bank, Tata Steel, PI Industries, Infosys, Maruti Suzuki India, and Bajaj Finance were among the other stocks that contributed to its gains.

Among sector holdings, Canara Robeco Bluechip Equity Fund's portfolio is majorly exposed to Banking and Finance having a combined allocation of around 35.7%. Infotech, Consumption, Engineering, Petroleum, and Auto are among the other prominent sectors in the portfolio with an exposure of about 5% to 12% in each. It also holds diversification to Pharma, Telecom, and Cement, among others. The top 5 sectors in CRBEF's portfolio together account for around 64% of its assets.

Suitability

Canara Robeco Bluechip Equity Fund has registered strong performance in the last few years and has outpaced many of its large-sized peers even in depressed market conditions. Backed by a well-defined investment process, Canara Robeco Bluechip Equity Fund focuses on risk management and picking quality names having high growth potential. This strategy enables it to limit the downside risk during tough market conditions and also perform well during market uptrends.

Canara Robeco Bluechip Equity Fund showcased superior performance in the 2020 market crash and also generated reasonable returns in the ensuing bull phase. With this, Canara Robeco Bluechip Equity Fund seems to be in its growth phase. Despite its relatively smaller size, the fund is well-placed to compete with its giant-sized large-cap peers and generate superior risk-adjusted returns in the long run.

Canara Robeco Bluechip Equity Fund is suitable for long-term investors having a preference for the stability of large caps along with the potential to generate decent alpha in terms of returns.

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.

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