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Canara Robeco Large Cap: Wait and watch
Wed, Feb 19, 2014
Source : Citrus Interactive

Canara Robeco Large Cap is an open ended equity scheme comprising mainly of equities having large market capitalization. As of December 31, 2013 the average asset under management under the fund is Rs. 102 Crore. The fund was launched on August 21, 2010 with the primary objective of capital appreciation through regular investment in large market cap companies and is benchmarked against S&P BSE 100 Index.

Fund Performance

The fund has outperformed its benchmark since inception and is in the second quartile over last 3 years. However the performance of the fund has slipped over the last one year lagging the category return and the benchmark. There has been a change in the fund manager in September 2012.

 Scheme Name YTD1-Year3-YearsSince Inception
Canara Robeco Large Cap+-4.941.17.185.17
S&P BSE 100-4.831.762.891.64
Category Average-3.553.045.4 
Rank163/193128/19059/175 

Figures are in % as on January 31, 2014; Returns above 1-year in Compounded Annual Growth Rate (CAGR)

The fund had an excellent performance in CY 2011 in falling markets beating the benchmark and category returns substantially. However the performance has slipped off late over the last couple of years lagging behind the benchmark and with the fund drifting in the third quartile in CY 2012.

 201120122013
Canara Robeco Large Cap+-12.7628.394.33
S&P BSE 100-25.7329.964.93
Category Average-23.9832.753.4
Rank4/176127/18595/190

Portfolio Characteristics

Number of equity holdings: Currently the fund holds 35 stocks in its portfolio which is lower than the median of 41 for the diversified equity category.

Sector Concentration: The fund is fairly diversified with level of concentration in the top three, five and ten sectors in its portfolio higher than the median for the category average.

 Top 3Top 5Top 10
Canara Robeco Large Cap+46.8264.5690.12
Category Median44.4959.5680.67

Company Concentration: Its concentration in top three, five and 10 companies in its portfolio is higher than the median for the category.

 Top 3Top 5Top 10
Canara Robeco Large Cap+22.0534.0355.05
Category Median19.2628.9947.02

The fund has a turnover ratio of 0.9 times with a portfolio beta of 0.87. The fund’s expense ratio is 2.70 per cent which is higher than the category median of 2.56 per cent.

Risk Measures: The fund’s risk level, measured in terms of standard deviation and beta over the last one year, is in line with the category median.

  Standard DeviationBeta
Canara Robeco Large Cap+0.98560.8668
Category Median0.99860.8383

Risk adjusted Returns: On the basis of risk adjusted returns (Sharpe Ratio & Treynor Ratio) over last one year, the fund is scoring lesser than the category median. The risk-adjusted return was much better as compared to category median in calendar year 2011 which has deteriorated subsequently.

 SharpeTreynor
Canara Robeco Large Cap+-0.0117-0.0133
Category Median-0.0049-0.0055

Portfolio

Canara Robeco Large Cap+ is a large cap oriented fund which invests in Top 150 companies based on their Market capitalization. As of December 2013, the fund had exposure to 35 stocks in its portfolio against the category median of 41. Its average portfolio since inception is around 38 stocks which represents a fair diversification. Being a large cap fund, all the equity investments of the fund is invested in large cap companies.

The top five sectors in the portfolio had an allocation of 65 per cent. These include Software, Banks, Consumer Non Durables, Auto and Pharmaceuticals. Top 5 company holdings account for around 34% of the portfolio comprising TCS, ICICI, Infosys, Reliance and L&T. The fund has an average holding of 28% in these securities over last one year.

The portfolio composition of the fund is very stable with top 20 holdings (barring one) featuring in each of the last 12 months. Top 20 companies comprises of 78% of the fund allocation in January 2014, with an average of 68% and a range of 60-78% in last 1 year.

The fund’s exposure to cyclical stocks currently is 51 per cent, followed by defensives of 19 per cent and Services around 26 per cent. The fund has cash and cash equivalents of 3.5 per cent in January 2014. The average has been 7.8 per cent in 2013 with highest level of 16.80% in August 2013.

Cyclical stocks had exposure levels of 40 to 60 per cent over the last 12 months. Meanwhile exposure to Services and Defensive stocks moved between 17-to-27 per cent and 16-to-21 per cent respectively.

Process

Canara Robeco Large Cap+ is a large cap oriented fund which invests in Top 150 companies based on their Market capitalization. The fund’s investment strategy states that it should invest a minimum of 65 per cent in large cap stocks. The balance 35 per cent the fund can be invested in domestic debt and money market instruments. As per the Scheme Information Document, the fund will also utilize the inputs from the internal quant model (Robeco Emerging Markets Quantitative model - ‘REM Quant model’) in its investment process which will act as an idea generator. However, the ultimate decision will be made by the portfolio manager and the beta of the portfolio would be maintained at levels higher than 0.75. The AMC would incorporate adequate safeguards for controlling risks in portfolio construction process. The fund will control maximum exposures to any one company/scrip to 5% over its benchmark weight (could be raised to 7% by the investment committee) and the sector concentration would be limited to 7.5% active bet over benchmark sector weight.

Like most equity funds the fund has an exit load of 1 per cent on or before one year from the date of investment. Minimum investment in the fund is Rs 5,000

Fund Manager

Mr. Ravi Gopalakrishnan has been managing this fund since September, 2012. Prior to him the fund was being managed by Mr. Soumendra Nath Lahiri who has taken the reins from Mr. Anand Shah. Mr. Ravi Gopalakrishnan has over 20 years of experience in managing/ advising portfolios for institutional and individual investors and handling the research function. He is also the Fund/Co Fund Manager for Canara Robeco Equity Diversified, Canara Robeco Infrastructure, Canara Robeco Emerging Equities, Canara Robeco Monthly Income Plan and Canara Robeco Yield Advantage Fund.

View

The fund since its inception in August 2010 has seen frequent changes in the fund managers. The fund invests in the large-cap space and has a new fund management team. The new team has been in place for now for over 1 year and has had enough time in which to restructure the portfolio according to their style. The fund has a very stable portfolio and is unlikely to throw up either positive or negative surprises, which may make it suitable for the risk-averse investor. However, at present there are better substitutes available for this fund and one may watch the performance of the funds before making an allocation to this fund.

 

 



 
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