Skip to main content

Mutual Fund Review: Principal Emerging Bluechip Fund

 

Principal Emerging Bluechip Fund boasts of a fine portfolio that can grow multi-fold over a period of time

 

THE year 2008 may well be reckoned as one of the most disappointing years for the equity markets globally. The year, however, provided an ideal platform to make fresh investments across sectors. Mutual fund schemes launched during this period and investors who dared to invest then are thus one happy lot today.


   Principal Emerging Bluechip can also be accredited for its excellent time of launch in October 2008. As the name suggests, the scheme is designed to invest in stocks of small and mid-cap companies which have portrayed potential to emerge as fine large-cap blue-chip companies of tomorrow. Given this objective, this scheme has ample scope to dig in and invest in value picks at opportunistic valuations.

PERFORMANCE:

Principal Emerging Bluechip Fund has had an overwhelming launch, not in terms of fresh collections or assets under management (AUM), but definitely in terms of performance. Thus, the past two months of 2008, after the scheme's launch, saw the fund returning more than 13% gains to its investors against the gains of about 2% by the scheme's benchmark index – the CNX Midcap.


   Thereafter, the year 2009 was one of the most exciting years for the fund as it returned over 147% gains in that year, taking its net asset value (NAV) to more than 28 per unit by the end of 2009. Just a year and two months ago, its NAV was quoting 10 per unit and did not have many takers. The scheme's stupendous performance is also evident from the fact that during this period CNX Midcap index returned about 99% while the returns of the broader market indices like the Sensex and the Nifty ranged from 76- 81%.


   After such a buoyant start, a lot was being expected from Principal Emerging Bluechip. In fact, this fund was being looked at one of the emerging diversified equity mutual fund schemes of the industry. Alas, however, this scheme slowed down its pace to such an extent thereafter, that it has dropped down in ranking from being an outperformer to just about an average performer.


   Market volatility of the year 2010 seems to have taken a heavy toll on the performance of Principal Emerging Bluechip which managed to return just about 20% gains against 19% returns by the CNX Midcap index. In the current year too, the scheme appears to be swinging with volatility and has returned a negative 14% against a negative 12% by the CNX Midcap so far.


   Thus, though the fund has proven its ability to outperform the markets in rallies, it still needs to prove its mettle in the downturn.


   As far as the overall returns are concerned, those who had invested in this fund in 2008 and 2009 are relatively better off as the scheme has retuned nearly 188% absolute returns since the time of its inception in October 2008. However, late entrants like those who have invested in this scheme in 2010 and thereafter are yet to earn some decent gains on their investments.

PORTFOLIO:

At an AUM of 316 crore, Principal Emerging Bluechip may not be termed as a very large fund. What is fascinating about this fund, however, is the manner in which its AUM has grown from less than 10 crore in October 2008 to the current levels.

 
   Given its investment objective of seeking emerging businesses across sectors, the scheme basically invests in small and mid size companies which relatively increase its risk quotient. Principal Emerging Bluechip can thus be assumed more volatile than the broader market.


   As far as the scheme's portfolio is concerned, with more than 60 equity holdings in its basket, it is extensively diversified and has limited its exposure per equity to less than 4%. This dilutes its risk per stock holding. Again, despite its high mid-cap exposure, the scheme has invested into some of the premium large-cap equity holdings like Asian Paints, Tata Motors, Cipla and HDFC. The scheme appears to churn its portfolio occasionally and most of its current holdings date back to mid 2009 to early 2010. Some of its most profitable holdings include Tata Motors, Bank of Baroda, Corporation Bank, Crompton Greaves and Mahindra Financial Services.


   As far as its profitability quotient is concerned, nearly 81% of the fund's equity portfolio currently earns it notional profit. The scheme has, however, booked notional losses in most of the investments made in 2010.

OUR VIEW:

Notwithstanding its outstanding competence to perform in the rallies, Principal Emerging Bluechip Fund is yet to prove its caliber amid volatility. The scheme, however, boasts of a fine portfolio which can grow multifold over a period of time. Investors with a fairly long-term horizon of at least five years and willing to take some risk may look at investing a small portion of their savings to Principal Emerging Blue-Chip.

 

Popular posts from this blog

Mutual Fund Review: Taurus Tax Shield

    Taurus Tax Shield has seen a turnaround in performance since 2007, but still remains a volatile offering… The fund has seen a turnaround in its performance since 2007 and has delivered impressively during market rallies since then. The portfolio is also more diversified. It contained its downfall to an average level in 2008 but is still one of the most volatile offerings in this category. Bold investors can look at this fund.   Strategy The fund manager invests across the market capitalisation and sectors. The selection of stocks is made on the basis of long-term business prospects and value creation. Fund Insight Launched in March 1996, the fund was a laggard with just two annual outperformances. Concentrated stock bets and high exposure to mid and small caps led to it being hit harder during market downturns. The number of stocks in the portfolio never exceeded 20 and it was not rare to see the top 5 holdings account for around 60 per cent of the portfolio. After b...

AXIS Long Term Equity Fund - The Best Tax Saver Fund for 2016

  AXIS Long Term Equity Fund - Invest Online   History:   The open ended mutual fund was launched on December 21 in the year 2009. It is benchmarked against BSE 200 and managed by the fund manager JINESH GOPANI. Initially the scheme was called as Axis tax saver fund but later it was renamed as Axis long term equity fund with effect from September 2, 2011. Nature of investment: As far as asset allocation is concerned, 97.52% of the stocks are equity and 0.02% is debt based. The primary focus of the fund is to invest in diversified equity stocks that have higher growth potential. Total asset size of the fund is in the tune of 4,996 CRORE as of June 30, 2015. Performance: The performance of the fund for one year, 3 years and 5 years are 23.6%, 29.9% and 19.1 respectively which are far greater than 6.4%, 14% and 5.6% benchmark figures. It has also preformed fairly well against SBI magnum Tax Gain (G) and HDFC tax saver (G). The growth comparison is enumerated below;                        ...

10 year NSC launched, all set to give 8.7 per cent

Invest in Mutual Funds Online Download Mutual Fund Application Forms THE government introduced a 10-year National Savings Certificate ( NSC ), which will earn an interest rate of 8.7 per cent per annum. The notification for the launch of the new savings instrument, 10-year National Savings Certificate (IX-Issue), 2011, has been issued, an official statement said. The scheme will come into effect from December 1, it added. Investments in NSC will earn interest at the rate of 8.7 per cent compounded semi-annually, it said, adding that on an investment of Rs 100, the depositor will get Rs 234.35 on maturity of the NSC. There is no upper limit for investment in the certificate, it added. The new scheme will give better returns along with tax benefit to savers. At present, the maturity period of NSC is six years and it qualifies for tax relief for investment up to Rs 1,00,000 under Section 80C. The decision to raise the maturity period of NSC has been taken on the b...

Health insurance guide - Part I

Insurance, by definition, is morbid. What if I die suddenly? What if my home caught fire? What if I had to undergo expensive medical treatment? What if something that I thought happened only to others befell me? Insurers, who work with large samples, calculate the probability of such an event and, hence, the possibility of them having to pay out a sum of money to mitigate, to the extent possible, the effects of that disaster. However, the possibility of you undergoing some kind of expensive medical treatment during your lifetime is far more likely than you dying suddenly or your house burning down. Given that costs at private healthcare facilities, where you are most likely to land up, is high, and, doubling every four years 10 months or so, the rest of your money life could easily go out of whack if you had to incur such expenses. Just 12 per cent of India's population is covered with some sort of health insurance. Pared to the bone, for a comparatively small price, health insu...

IDFC Classic Equity Fund

Invest In Tax Saving Mutual Funds Online Download Tax Saving Mutual Fund Application Forms Buy Gold Mutual Funds Call 0 94 8300 8300 (India)   IDFC Classic Equity Fund IDFC Classic Equity is a large-cap equity fund which currently has assets under management worth Rs. 158.52 crore. It was launched in August 2005. The fund is benchmarked against the BSE-200 Index. Performance YTD 1-Year 3-Year 5-Year Since Inception IDFC Classic Equity 0.93 26.61 6.30 1.01 11.65 BSE 200 1.52 17.31 6.00 1.99 12.98 All figures in % as on January 31, 2013; Returns above one-year in CAGR terms ...
Related Posts Plugin for WordPress, Blogger...
Invest in Tax Saving Mutual Funds Download Any Applications
Transact Mutual Funds Online Invest Online
Buy Gold Mutual Funds Invest Now