Canara Robeco Emerging: A conservative midcap investment

The Canara Robeco Emerging Equities fund is for those who want a conservative investment in the midcap space, says expert Arnav Pandya. However, risks are high when market conditions are volatile.

Canara Robeco Emerging Equities

Nature: Equity oriented open ended

Inception: February 2005

Assets under management: Rs 43 crore at the end of October 2011

Fund Manager: Soumendra Nath Lahiri

Analysis

• The fund focuses on mid and small cap companies for capital appreciation. At the end of October 2009 the fund had the highest exposure to pharmaceuticals followed by banks and consumer non durables. The portfolio turnover ratio was low at 0.2 times. Kesoram was the top holding followed by Allied Digital Services, Zydus Wellness, Godawari Power and Page Industries. The funds benchmark was BSE 200 and it was outperforming this for the one year time period. The fund had 13 per cent of the portfolio in liquid assets which was a slightly higher figure.

•  Six months later banks were the top holding of the fund followed by consumer non durables and construction. What was significant was that the fund had managed to ensure the low turnover ratio at 0.2 times. Page Industries was the top holding followed by Zydus Wellness, Torrent Pharma, Coromandel International and Allied Digital Services. The fund still had around 9 per cent of its portfolio in liquid assets and was an outperformer only for the one year time period. The fund now had a different benchmark in the form of CNX Mid cap index.

• Its portfolio at the end of October 2010 was interesting as it had the highest exposure to pharmaceuticals at 11 per cent of the portfolio. This was followed by consumer non durables and textiles. In terms of individual stocks Torrent Pharma was the top holding with an exposure of nearly 5 per cent of the portfolio. The other top holdings included Page Industries, Vardhman Textiles, Hindustan Media Ventures and Shoppers Stop. The fund was outperforming its benchmark over a one year time period but not the three and five year period.

• By the end of April 2011 consumer non durables had replaced pharma as the top sector and these two were followed by software and cement. Jubilant Foodworks with nearly 5 per cent of the portfolio was the top individual holding followed by Torrent Pharma, Vardhman Textiles, Page Industries and Coromandel International. The portfolio turnover ratio was now higher at 0.8 times and it was outperforming the benchmark over the one and three year time periods. The fund still had 7 per cent of the portfolio in liquid assets.

• The fund had the highest exposure to consumer non durables six months followed by banks, construction and cement. The top holding was now Orient Paper followed by Torrent Pharma, McLeod Russell, Britannia Industries and Sadbhav engineering. The fund still had nearly 8 per cent of its portfolio in liquid assets. The fund was an outperformer over the one and three year time periods.

•  The fund has improved its position in recent times with its outperformance stretching over a longer time period. This is meant for investors who want to invest in the mid cap space with a slightly conservative approach though risks will remain high especially when market conditions are volatile.

Disclaimer: Views expressed in this article are entirely personal.
arnavpandya@hotmail.com.

For full details of the fund including NAV performance, portfolio, and peer comparison click here.