Canara Robeco Equity Diversified scheme has made an impressive mark in the industry over the past couple of years. But investors can wait for few moths to gauge its performance
IT IS quite small in size, but that is no hindrance to the power-packed performance delivered by this fund, especially over the past couple of years. Launched in September 2003, Canara Robeco Equity Diversified scheme, with assets under management (AUM) of just over Rs 300 crore today, shot to fame after its parent Canara Bank tied up with Robeco Group of Netherlands in 2007. The joint venture resulted in a major turnaround in the performances in many of the schemes of this relatively small fund house across various categories.
PERFORMANCE:
Before 2007, Canara Robeco Equity Diversified was barely recognised in the mutual fund industry. Managing less than even Rs 100 crore of assets then, the scheme had failed keep pace with the rise in the broader market indices, let alone the average of the category of diversified equity schemes. No wonder, the scheme was rated as one amongst those at the bottom of the MF performance pyramid. But no more...
Today, this scheme stands out as one of the top performers having generated absolute gains of about 35.5% over the past one year and about 51% absolute gains over the past three years. This implies that Rs 1,000 invested in this scheme about three years back in July 2007 would be worth Rs 1,510 today. These returns are far superior to those of the Sensex and the Nifty, which have returned about 17% and 18%, respectively over the past one year and about 18% and 21% absolute returns, respectively over the past three-years. The category of diversified equity schemes has returned absolute gains of about 28% and 23.5%, respectively during these periods.
If you consider the year-wise performance of the scheme, then with over 63% gains in the year 2007, the fund was successful in beating the 60% gains by its benchmark index - the BSE 200 as well as those of the Sensex and the Nifty, which ranged between 47-55%. While the meltdown year of 2008 did impact the performance of Canara Robeco Equity Diversified too as its net asset value (NAV) collapsed by about 51% in the year, it was better off than the fall in BSE 200 as well as that of its peers which fell by an average of about 56%.
Again in 2009, the fund made a smart recovery with about 93% gains against the recovery of about 89% made by the BSE 200 and about 85% by the category of diversified equity schemes in that year. And despite the markets being at their volatile best since the beginning of this year, Canara Robeco Equity Diversified has successfully maintained its pace, generating more than 12% returns since January this year against BSE 200's 5% and the Sensex and the Nifty's 4% gains, respectively, during this period.
PORTFOLIO:
Canara Robeco Equity Diversified's multi-cap portfolio is currently well diversified with around 40 stocks with exposure per stock restricted to less than 5%. This considerably reduces the stock specific risk of the portfolio. As far as the stock selection and turnover is concerned, the fund appears quite proactive in churning its portfolio and most of its current holdings are less than six months old. This may sound opportunistic as the fund manager believes in active portfolio management and keep a track of the market developments. The downside of this strategy is that it's costly and the fund may, in future, lose out on the opportunities resulting from long-term holding.
Being opportunistic has, however, helped the fund so far as is evident from its portfolio and performance analysis. Canara Robeco Equity Diversified can be credited as one of the few schemes to have encashed upon the boom in the pharma sector. Its exposure in the pharma sector shot up drastically from less than 3% until September 2008 to more than 8% now. This played a big role in its stupendous performance last year.
In the recent past, the fund has gradually increased its exposure in the oil refining segment from about 6.8% in March 2010 to more than 8% by the end of June 2010. The fund has thus been a beneficiary of the gains accrued to the companies in this sector after the partial decontrol of the sectors last month.
Of late, however, it has drastically reduced its exposure in the IT sector from nearly 15% in January 2010 to about 9% by the end of June 2010. With corporate results in the sector far better than expected and companies seemingly poised for growth in future, it will be interesting to see the fund manager's take on this sector in the coming months.
OUR VIEW:
Canara Robeco Equity Diversified scheme has made an impressive mark in the MF industry over the past couple of years. While the scheme does not boast of a large asset base, it's a matter of time provided it continues to sustain its recent performance. The scheme has proved its potential and would be interesting to observe its performance over the next few months to gauge whether the turnaround in its performance is not momentary.
