Canara Robeco Emerging Equities Fund Review (CREEF)

About the fund:

Canara Robeco Emerging Equities (CREEF) is a large and mid-cap fund, as per the Securities and Exchanges Board of India (SEBI), a large & mid-cap fund Should invest 35% of total assets in equity and related securities of large-cap firms and 35% of total assets in equity and related securities of mid-cap firms, remaining 30% is invested as per the fund manager’s view.

Fund Manager:

CREEF is managed by Mr. Shridatta Bhadhwaldar, an MMS (Finance) graduate and he started working as a fund manager in Canara Robeco AMC in July 2016, Prior to this, he was a portfolio manager at SBI Pension Fund.

Who Can Invest?

The fund is suitable for investors who are seeking capital appreciation for a minimum period ranging from 3 to 5 years or more and have the ability to hold on to their investments in the fund during market cycles.

Exit Load: The fund has an exit load of 1% for the units redeemed from the investment within 365 days.

Stocks & Sectors

The top 10 Stocks and sectors are as follows:

CREEF Asset Allocation:

Moderate Turnover Ratio, Low-to-Moderate stocks concentration, and benefit from exposure to mid-cap stocks

The current number of stocks in the CREEF are 51. The fund has a turnover ratio of 35%, indicating a low churning and stable holding of the investments.

The top 5 stocks in the portfolio of CREEF constitute only about 23.58% of the total portfolio and the top 10 stocks allocated in the portfolio is about 36.90%, which is very low.

This low to moderate asset allocation to the top 10 constituents of the portfolio leads to less dependency on the performance of top stocks for the fund to deliver decent returns.

Exposure to mid-cap stocks in the portfolio is at 37.40%. This exposure to mid-cap stocks allows the fund to capture a good quantum of returns during the uptrends of the markets. However, increased volatility is also expected due to the same.

Fund Performance & Risk Profile:

Peer Comparison:

Diversified Investments; Very Low Concentration of Stocks:

CREEF has diversified its investments i.e., Infosys carrying only about 5.96%, and the total Top 10 stocks allocation is at 37%, and the remaining 41 stocks holding in the portfolio is at 63%. This gives its investors an opportunity to capture decent returns from the increase in the stock prices at the mid-portion of the portfolio also.

Similar Volatility as its Index and Good Risk-Return Ratios:

As shown above, the fund is able to deliver stable returns to its investors successfully over the years and the fund has a standard deviation of 21.46%, while its index S&P BSE Large Midcap TRI’s standard deviation is at 21.26% and the 3-year Sharpe ratio of CREEF is at 0.81, better than its benchmark S&P BSE Large Midcap TRI.

Recommendation:

We recommend equity mutual fund investors to accumulate the units of the fund due to its ability to give stable returns to its investors with comparatively similar standard deviation and higher risk-return ratios than its benchmark. However, the holdings contain 37% of midcap stocks, due to this an individual’s ability to hold the investments during volatile periods of the markets remains as an important factor to be seen

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