Hyderabad: Canara Robeco Mutual Fund, one of the leading asset management companies in India, today announced the launch of Canara Robeco Mid Cap Fund, an open-ended equity scheme that would predominantly invest in equity and equity-related instruments of mid-cap companies, with the objective of generating capital appreciation over a longer term of five years and above.
Canara Robeco Mid Cap Fund’s New Fund Offer (NFO) will open on Friday, November 11, 2022, and close on Friday, November 25, 2022.
As a fund house, while Canara Robeco Mutual Fund’s ethos is to invest in robust growth-oriented businesses, with competent management and a reasonable valuation, Canara Robeco Mid Cap Fund would aim to invest in midcap companies that are at the confluence of industry growth, company growth and management pedigree.
Speaking on the occasion, Mr. Rajnish Narula, MD & CEO, said: “Canara Robeco Mid Cap Fund would offer an attractive opportunity to create wealth over the long term through both the lumpsum and SIP mode of investment. Mutual Fund investors who are comfortable displaying patience to ride market volatility, keeping an investment horizon of over five years, may benefit from risk adjusted returns.”
Mr. Shridatta Bhandwaldar, Head – Equities & Fund Manager, said: “In the last few years, the number of earnings growth leaders within the midcap segment, rising the most, with a dominant 75 per cent of these businesses depending on domestic factors, offering better risk-adjusted returns from under-researched companies in the emerging themes and sectors, makes for an attractive investment proposition in the midcap segment.”
“The portfolio of Canara Robeco Mid Cap Fund would comprise three types of buckets. The first bucket will focus on companies with high growth, which will identify leaders and domestic growth beneficiaries with superior earnings growth. Compounding companies that exhibit features of strong franchise durability, high cash flow generation, low capital intensity and minimal financial leverage, will form part of the second bucket. The third bucket would focus on cyclical beneficiary companies that showcase improved cash flows, increased return on capital from business turnaround, or industry cycle revival,” Mr. Bhandwaldar added.
Midcap companies are under-researched. The average CAGR performance for leaders within the midcap segment has been far superior over a one-to-seven-year period, as compared to the S&P BSE Midcap 150 index. The one-year average CAGR as of September 30, 2022, the most volatile period for the midcap leaders, was 10 per cent, compared to the index’s one per cent. Likewise, the five-year average CAGR of midcap leaders stood at 22 percent compared to 13 percent offered by the index and the seven-year CAGR stood at 23 percent as compared to 15 percent for the index.
The portfolio of Canara Robeco Mid Cap Fund would comprise of investments in ~150 stocks across three buckets. The first bucket will focus on companies with high growth, which will identify leaders and domestic growth beneficiaries with superior earnings growth. Compounding companies that exhibit features of strong franchise durability, high cash flow generation, low capital intensity and minimal financial leverage, may form part of the second bucket. The third bucket would focus on cyclical-driven companies that showcase improved cash flows, increased return on capital from business turnaround, or industry cycle revival.
It is to be noted that the above-mentioned selection and portfolio construction process will be followed by the fund manager and is subject to change based on market dynamics, economic scenarios, etc.
The S&P BSE 150 Midcap and Nifty 150 Midcap TRI indices have rarely dipped into negative territory in three and five-year rolling CAGRs. This aspect stands in good stead for the companies in the midcap segment.
Canara Robeco Mid Cap Fund may invest up to 35 per cent in equity and equity-related instruments of companies other than midcap companies, debt and money market instruments and up to a maximum of 10 per cent in units issued by REITs and InvITs.
Canara Robeco Mid Cap Fund would allow lumpsum investments of a minimum of INR 5,000 during the NFO period. It will take investments via SIP, STP and SWP after the NFO period. The fund would be benchmarked against the S&P BSE 150 Mid Cap Index TRI.
Mr. Ajay Khandelwal and Mr. Shridatta Bhandwaldar are the fund managers for Canara Robeco Mid Cap Fund.
