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IDFC Classic Equity: Promising Large Cap Fund
Wed, Dec 21, 2016
Source : Yash Jashnani, Citrus Interactive

IDFC Classic Equity Fund is an open ended large cap equity diversified fund. The investment objective of the scheme is to generate long term capital growth from a diversified portfolio of predominantly equity and equity related instruments. The fund has an AUM of Rs. 490 crore which has increased by Rs. 330 crore compared to November 2015.

 

Performance

 

The fund’s performance across various time horizons is good as seen in the table given below. It has beaten its benchmark in all the time periods except in the Since Inception period. It has also beaten the category average in YTD, 6 months & 1 Year but has underperformed in the 3 and 5 years.

 

 

Scheme Name

YTD

6 Months

1 Year

3 Years

5 Years

Since Inception

IDFC Classic Equity Fund

9.61

8.63

11.92

15.06

14.52

11.53

 S&P BSE 200

5.35

3.19

5.73

13.01

12.73

11.99

Category Average

7.04

6.79

7.24

21.12

17.86

NA

Rank

39/146

48/146

29/143

107/131

95/127

NA

 Figures are in % as on 30th November 2016; Returns above 1 year in Compounded Annual Growth Rate (CAGR)

 

In terms of the calendar year returns the fund has beaten its benchmark in 2011, 2012 and 2015 but has underperformed in 2013 and 2014. It has generated higher returns than the equity diversified category in 2012 and 2015 but has underperformed in 2011, 2013 and 2014 compared to its category average as shown in the table below.

 

Scheme Name

2011

2012

2013

2014

2015

IDFC Classic Equity Fund

-26.79

37.26

2.51

28.62

5.21

 S&P BSE 200

-26.95

30.98

4.38

35.47

-1.48

Category Average

-23.95

34.19

5.33

54.32

3.79

Rank

98/129

43/134

106/138

136/140

54/148

All figures in %

 

Risk: In terms of measures of risk such as Standard deviation and Beta (measured over the last 3 years) the fund has taken equal risk as compared to its category median.

 

 

 

Standard Deviation

Beta

IDFC Classic Equity Fund

0.92

0.91

Category Median

0.92

0.91

 

 

Risk-Adjusted Return: In terms of Treynor (measured over the last 3 years) the fund has given lower risk-adjusted returns than the category median and in terms of Sharpe ratio (measured over the last 3 years) the fund has given the same risk-adjusted returns as the category median.

 

 

 

Treynor

Sharpe

IDFC Classic Equity Fund

0.06

0.07

Category Median

0.07

0.07

 

 

Portfolio

Sector concentration: The fund’s concentration in the top 3, 5 and 10 sectors is higher than the category median.

 

 

Top 3

Top 5

Top 10

IDFC Classic Equity Fund

47.32

57.31

75.72

Category Median

33.43

45.81

65.78

All figures in %

 

Company concentration: The Fund’s Concentration in the Top 3, 5 and 10 companies is lower than the category median.

 

 

Top 3

Top 5

Top 10

IDFC Classic Equity Fund

13.94

20.68

32.75

Category Median

15.93

24

39.74

All figures in %

 

Number of Equity Holdings: The Fund currently holds 62 stocks in its portfolio (30th November 2016), which is higher than the median stock count of the equity diversified category, which currently stands at 46. In the last 5 years the equity holding averages to 34.

Hence the fund maintains a diversified portfolio at the stock level.

 

Cash Equivalent:

           

Its cash equivalent for November is 9.82 per cent. The average cash allocation for the last five years is 4.83 per cent. Its maximum allocation to cash over the last two years is 19.92 percent in April 2016 and lowest was 0.89 percent in March 2015. In 2016 it had an average cash allocation of 9.10 per cent.

 

Portfolio Characteristics:

 

The Top 5 sectors include Bank-Private, Refineries, Power Generation/Distribution, Bank-Public and IT- Software

 

In the last 6 months the fund has bought Apollo Tyres Ltd. Bank Of Baroda, Bharat Electronics Ltd., Bharat Petroleum Corporation Ltd., Bosch Ltd., Cipla Ltd., Credit Analysis And Research Ltd., DCM Shriram Ltd., GAIL (India) Ltd., Hindalco Industries Ltd., Hindustan Petroleum Corporation Ltd., ICICI Prudential Life Insurance Company Ltd., Indian Oil Corporation Ltd., Kotak Mahindra Bank Ltd., Larsen & Toubro Ltd., Mahindra & Mahindra Financial Services Ltd., Mahindra & Mahindra Ltd., Minda Industries Ltd., Nava Bharat Ventures Ltd., Oil & Natural Gas Corporation Ltd., Power Grid Corporation Of India Ltd., Punjab National Bank, RBL Bank Ltd., Sheela Foam Ltd., Skipper Ltd., SREI Infrastructure Finance Ltd., Taj GVK Hotels & Resorts Ltd., Tata Coffee Ltd., The Karnataka Bank Ltd. and Wipro Ltd.

 

Stocks of Aditya Birla Nuvo Ltd., Alkem Laboratories Ltd., Asian Paints Ltd., Atul Ltd., Bajaj Corp Ltd., Bharti Airtel Ltd., Greenply Industries Ltd., J Kumar Infraproject Ltd. and Lupin Ltd.

Shree Cement Ltd. have been dropped from its portfolio and stocks of Advanced Enzyme Technologies Ltd., Manappuram Finance Ltd. & Max Financial Services Ltd. have been bought and sold in the last 6 months

 

Process

 

The scheme will endeavor to invest in well managed sustainable businesses whose shares are available at reasonable value through a process of disciplined research. The portfolio will aim to provide part ownership to investors in some of the best run companies in India. The portfolio of securities will be well diversified across sectors, so identified, to mitigate overall risk.

 

As the scheme is expected to be part of the core long term equity holdings of the investors, a well-balanced and prudent style of fund management will be adopted to endeavor to deliver good returns at controlled levels of risk.

The scheme would invest 65-100% in Equity & Equity Related Instruments. It would also invest 0-35% in Debt & Money Market Instruments and it would invest 0-35% in securitized debt instruments.

 

Upto  50% of its net assets would be invested in Derivatives.

 

 

Fund Manager

 

Anoop Bhaskar

Mr. Anoop Bhaskar serves as Head of Equities at IDFC Asset Management Company Limited since June 2016. Previously, Mr. Bhaskar served as Head of Equity and Fund Manager at UTI Asset Management Company (P) Ltd. since April 2007. Mr. Bhaskar joined UTI Asset Management Company (P) Ltd. in April 2007.


He previously served as the Head of Equity at Sundaram BNP Paribas Asset Management Co. Ltd. from August 2003 till March 2007. Mr. Bhaskar was a Senior Research Analyst and Portfolio Manager at Templeton Asset Management Ltd. from 1993 to 2003. Before that, he served as a Manager of Investments at Shriram Financial Services Ltd. from 1992 to 1993.


Other schemes managed by Mr. Bhaskar are IDFC Sterling Equity Fund and IDFC Premier Equity Fund.


Mr. Bhaskar has earned an MBA in Finance from Symbiosis Institute of Business Management, Pune and a B.Com. from the Delhi University.

 

Viraj Kulkarni

Mr. Kulkarni is associated with IDFC AMC since September 2015 and is a dedicated fund manager for foreign securities since March 2016. Previously he served as a future associate at Franklin Templeton India from May 2014 to September 2015. Before that he worked as an intern at Citibank India in the Securities & Fund Services Department. He also worked as an Analyst Developer with Goldman Sachs from June 2010 to May 2012.

Mr. Kulkarni is a Chartered Financial Analyst, Finance (CFA). He holds a degree in PGDM (Finance) and has also earned a degree in B.Tech (Electronics).

 

Our View


The fund has been re-structured by Mr Anoop Bhaskar after taking charge in June 2016. This has had a positive impact on the fund performance. Mr Bhaskar also has a good track record in the large cap fund space. We recommend the fund as part of the large cap allocation based on the risk profile of the investor.

 

 
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