The objective of Canara Robeco Emerging Equities (CREE) is to generate long-term capital growth by investing in diversified mid-cap stocks that have a potential to turn into largecap stocks in the future. The fund predominantly invests in midand small-cap stocks and has the Nifty Free Float Midcal100 as the benchmark. Little over a decade old, the fund has continuously outperformed its benchmark in both down and up cycles of the market.
Given the universe in which it invests, the fund’s portfolio tends to be large with about 65-70 stocks at any given point in time. In 2016, the fund house changed the fundamental attribute of this fund, after which it now has 65-100 per cent equity allocation to mid-cap stocks. The fund manager, Ravi Gopalakrishnan, had explained the need for this change in attribute as he felt the price movement in the mid-cap space necessitated a higher allocation to stocks in the mid-cap category.
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On the performance front, the fund has steadily added to its assets, which stood at Rs 1,896 crore at the end of May, 2017. The fund manager believes in the financial services industry playing a big role in the superior performance of the fund, which has resulted in the sector having the highest allocation of 12.5 per cent. Investments in chemicals, FMCG, automobile and construction are all bets placed assuming an economic kick-off which will benefit the stocks in the mid-cap domain.
The performance has largely benefited from the astute risk-management philosophy demonstrated by the fund management with adequate diversification. By checking on the allocation to a single stock and sector, the fund manager makes it a point not to be stuck with illiquid stocks, which can impact on the performance in the long run. Investors with a 3-5 year time frame of investment and willingness to take a degree of risk could consider investing in this fund.
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