Fund of Fortnight
This is our mutual fund recommendation. Every fortnight ,we recommend one open-ended equity diversified fund that has the best potential of returns for the next one year considering its constituents remain the same.
Canara Robeco Emerging Equities Fund - Direct Plan (Growth)
Reason for recommendation
Even as we once again look at the rising graph of uncertainty in the equity market due to US’ election, rising corona virus cases in the northern hemisphere of the world and absence of any stimulus packages in India or the US, it is advisable to invest in a category of funds that offers stability of returns in such times without losing the growth opportunity. The large-cap and mid-cap category is one such category that will help you to sail through uncertain times. Large-cap stocks are industry leaders and have enough operating levers to manage volatility while mid-cap companies will help you to generate better returns as the economy recovers from its recent low. CanaraRobeco Emerging Equities is one such fund from this category that has proved its mettle and has one of the highest Sharpe ratios in its category. It has consistently delivered high risk-adjusted returns over the long term and is one of the best from among its peers. For a period of 10 years it has generated return of 10.65 per cent annually. This has been achieved due to the growth style of investment followed by the fund. Moreover, the fund takes larger exposure to mid-cap stocks compared to its peers, which is mostly dominated by large-cap stocks. The current tilt of the fund is towards mid-cap stocks which formed 51 per cent of its portfolio at the end of September 2020. This was followed by 41 per cent in large-cap stocks. Nonetheless, the fund has a well-diversified portfolio with 55 stocks of which the top 10 stocks form only 35 per cent of the portfolio. What is also interesting about the fund is that it gives higher weightage to financials and is underweight on healthcare and technology when compared to its peers. Therefore, this is a fund suitable for those investors who have an investment horizon of more than two years and can take moderate risk.
