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

What is Electronic Clearing Service (ECS)?

  As the name suggests, it's an electronic process through which money can be transferred from one bank account to another. According to RBI, this mode is usually used for regular payments and receipts, like distribution of dividend, interest, salary, pension etc. This mode is also used for collection of bills for telephone, electricity, water, various types of taxes, payment of EMIs , investments in mutual funds , payment of insurance premium etc. There are two types of ECS , like most other banking transactions, ECS credit and ECS debit. An ECS credit is used by a bank account holder , usually a large company or an institution for services like payment of dividend, in terest, salary, pension etc. If your mutual fund pays you dividend to your bank account, of all probability it is being paid through ECS credit.ECS debit, on the other hand, is used when a company or an institution is getting money from a large number of people. For example if you are investing in a mutual fund sc...

Equity Savings Fund

Invest Equity Savings Fund Online   The best part about these funds is that they are subject to equity fund taxation and at the same time are structured like MIP like funds . This new category, equity savings funds , offer a little of everything. They allocate money to equities & equity related instruments, and fixed income. They aim to generate returns by diversification. Such funds invest in fixed income and arbitrage to protect the investors from short term volatility and equity for capital gains. The best part of these funds is that they are subject to equity fund taxation and at the same time are structured like MIP funds.   MIP funds however are subject to debt fund taxation. Investors Equity savings funds are suitable for the following: First time investors who seek partial exposure to equity with less volatility and greater stability Investors seeking moderate capital appreciation with relatively lower risk Those wh...

WEALTH TAX

Download Tax Saving Mutual Fund Application Forms Invest In Tax Saving Mutual Funds Online Buy Gold Mutual Funds Leave a missed Call on 94 8300 8300 WEALTH TAX   WHAT CONSTITUTES WEALTH? For wealth tax purposes, "wealth" means property , urban land, car, jewellery , yacht, boat, aircraft and cash in hand in excess of Rs 50,000. CAUTION POINT | Do not think you will have an easy escape from wealth tax by transferring your `wealth' without consideration to your spouse or minor child. Such assets will also be considered as your wealth. HOW TO DETERMINE YOUR TAXABLE WEALTH Add the taxable value of the above assets (computed as per the detailed rules for valuation) owned by you as on March 31 (for FY 2014-15, it will be March 31, 2015). In case you sold your car during the year, it will not be taxable wealth. Deduct loans if any obtained by you to acquire any of the taxable assets from the value of gross tax out for at least 300 days in a...

How to Pick Top Performing Mutual Fund Schemes

Download Tax Saving Mutual Fund Application Forms Invest In Tax Saving Mutual Funds Online Buy Gold Mutual Funds Leave a missed Call on 94 8300 8300   How to Pick Performing Schemes  Funds that continue to stay in the top grade of performance over longer periods are the ones to bet on, advise investment experts   The mutual fund performance charts of the past few months make for an impressive reading. Funds across all categories boast of stellar returns. Sample this: The mid and small cap category has averaged 77 percent return over the past 12 months, with the best fund delivering a staggering 120 percent. The tax-saving funds also average an impressive 51 percent, including a fund which has soared 92 percent. Many of the table-toppers are funds of proven quality and track record. However, there are also schemes that are not that well-known. Some of these have rarely made it to the performance charts in the past, yet, of late, they bo...

Section 80CCD

Top SIP Funds Online   Income tax deduction under section 80CCD Under Income Tax, TaxPayers have the benefit of claiming several deductions. Out of the deduction avenues, Section 80CCD provides t axpayer deductions against investments made in specific sector s. Under Section 80CCD, an assessee is eligible to claim deductions against the contributions made to the National Pension Scheme or Atal Pension Yojana. Contributions made by an employer to National Pension Scheme are also eligible for deductions under the provisions of Section 80 CCD. In this article, we will take a look at the primary features of this section, the terms and conditions for claiming deductions, the eligibility to claim such deductions, and some of the commonly asked questions in this regard. There are two parts of Section 80CCD. Subsection 1 of this section refers to tax deductions for all assesses who are central government or state government employees, or self-employed or employed by any other employers. In...
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