If there is one large cap equity mutual fund scheme that has remained at the top of the analysts "buy" list, it is the Canara Robeco Bluechip Equity Fund. This mutual fund scheme has been accorded a "5" star rating from Crisil, as also from Value Research and Morning Star, which have also accorded it the highest rating. Let's take a look at what has led them to rate the fund so highly.
Canara Robeco Bluechip Equity Fund – Good returns
The 1-year returns from the fund is a pretty decent 50%. However, readers should know that at the same time in May last year (May 2020), the Sensex was near the 30,000 levels on account of the global sell-off in equities following the rapid spread of the corona virus. However, currently (May 2021) the Sensex is now near the 48,000 levels mark and hence the Sensex has jumped nearly 50%, which is why most equity mutual funds are showing 1-year returns of 50% or more.
The 3-year returns from the Canara Robeco Bluechip Equity Fund is 14.85%, while the 5-year returns are close to 16%. Even in the longer term horizon, the returns are pretty good.
Canara Robeco Bluechip Equity Fund has a sound portfolio. Among the stocks in the portfolio include bluechip names like HDFC Bank, Infosys, ICICI Bank, Reliance Industries and TCS among others. Together they account for almost 32% of the equity portfolio. About 96% of the funds are invested in equities and the balance is held in cash and cash equivalents.
The company's portfolio has the largest chunk of holdings in financials. Currently, the corpus size of the fund is Rs 2100 crores and the net asset value under the growth plan is Rs 34.77. One can invest in the fund through the SIP route, where the minimum amount for investment is Rs 1,000. There is an exit load of 1%, if you exit the fund before a period of 1 year.
Should you buy into Canara Robeco Bluechip Equity Fund?
There is little doubt that this fund has been highly rated By CRISIL, Morning Star and Value Research. However, given the way the markets have rallied in the last 1 year, we believe that there is very limited scope to make solid returns.
Yes, nominal returns are very much possible, but, if you are looking at higher returns, you should wait for the markets to dip and a fall in the NAV. The better option we would suggest is to avoid putting a lumpsum and hedge your risk by way of investing through the SIP route. The markets have run-up too sharply and with lockdowns and curfew across cities, corporate numbers are going to be impacted even for FY 2021-22 as well. Therefore, we believe that markets are overpriced at these levels. Investors should hence exercise caution, before pumping large money into mutual fund schemes.
About the author
Sunil Fernandes has spent 26 years covering business and finance in India and abroad. Sunil has worked with frontline daily newspapers including Hindustan Times, Deccan Herald and Gulf Times. He has also worked with investment magazines like Dalal Street Investment Journal and Oman Economic Review. His forte remains stocks, mutual funds and tax planning.