Fund of Fortnight

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 Consumer Trends Fund - Direct Plan (Growth)​



Reason for recommendation

Frontline equity indices are trading at a lifetime high. Nonetheless, there are various pockets of opportunities still available. Financials that grew by 25 per cent in the month of November are still giving a negative return year-till-date. Similarly, there are other themes where juices are still left. One such theme where we can still find value is consumption, which also includes financial services, consumer durables, etc. This theme has already generated handsome returns in the last couple of months. However, going ahead as growth becomes broad-based, we will see this theme playing out aggressively. Canara Robeco Consumer Trends is one such fund that is based on this theme. The fund has been one of the best performers in its category in the last six-month, one-year and three-year category. The fund has been a consistent performer and generated a return of 15.35 per cent since inception. One of the reasons for its consistent performance is that the fund is large-cap tilted. At the end of November 2020, large-cap-dedicated stocks constituted 66 per cent of the fund’s corpus against 59 per cent of the category average.

Mid-cap and small-cap stocks constituted 20 per cent and 10 per cent of the net assets of the fund at the end of November 2020.


What makes the fund our choice is its overweight on financials and consumer durable sectors that form 45 per cent of the fund’s AUM. These sectors have not moved to the stretched valuation yet. Even within the financials and consumer durables segment, the fund holds the best and biggest names such as HDFC Bank, ICICI Bank and Asian Paints as majority holdings. Even if we see volatility in the market going ahead, large-cap stocks are likely to show less volatility. Since this is a thematic fund, we advise this fund to aggressive investors.

 

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