Canara Robeco AMC is launching an NFO, which is set to open for subscription from April 23rd, 2021 and closes on May 7th, 2021.
Investment Objective: The investment objective of the scheme is to generate long term capital appreciation by investing in equity and equity related instruments.
Investment Strategy: The scheme will invest across market capitalisations and will not hold more than 30 stocks at any point of time. The fund will invest in a portfolio of high growth, high quality companies The portfolio will be concentrated and own high-conviction businesses that can generate higher alpha.
Fund Manager: Mr. Shridatta Bhandwaldar
Benchmark: S&P BSE 500 TRI
Fund Management Process:
- The fund aims to buy high quality businesses that fall under one of the below categories -
- Leaders - The fund will invest in market leaders with proven track record that will provide consistent compounding and stability to the portfolio
- Challengers - These are companies whose market share and earnings have been improving more than the leaders and have the scope to generate alpha in the portfolio
- Emerging themes - These stocks are part of industries that are emerging and future-oriented and have the potential to become large caps of tomorrow.
2. The fund will choose the allocation between large, mid and small cap by analysing market conditions and with the view of managing risk.
3. The portfolio is a focused portfolio and will hold a maximum of 30 companies across all market capitalisations.
Based on our analysis, we have observed the following pros and cons
Pros:
- Diversification across market caps
- Strong, quality-oriented process for stock selection.
- Focused funds have the ability to generate higher alpha than other active funds in the market since it holds only 30 stocks.
- Strong track record of fund manager and other funds managed by him under the AMC.
Cons:
- Concentration risk due to limited number of stocks in the portfolio - negative performance of 1 or 2 stocks can affect the entire portfolio significantly.
Focused funds are high risk, high return investments. The success of these funds depend heavily on the stock-selection ability of the fund manager. If done correctly, these funds can generate high alpha due to the exposure to mid and small cap stocks and a concentrated portfolio. A small allocation to a focused fund along with other equity funds can add long-term alpha in the portfolio of a moderate - aggressive investor.
Investors can consider allocating a small amount of their portfolio towards this fund if they have a high risk appetite and are looking to stay invested over 5 years. It is of utmost importance that the fund should be discussed with your financial advisor and then ascertain whether it is suitable to invest. Always read the scheme documents fully before investing.
