Canara Robeco Mid Cap Fund NFO: Should You Invest?

As the markets approach record highs, asset management companies are issuing a flood of new fund offerings (NFOs). In this context, Canara Robeco Mutual Fund is launching a new midcap NFO, despite the fact that it does not introduce new schemes as aggressively as some other firms.

 

Given their robust climb from April 2020, there has been increased interest in mid and smallcap stocks and ETFs in recent years. Even yet, many midcap funds continue to fail to outperform their benchmarks, even outperforming their large-cap rivals.

 

Canara Robeco has a decent track record with the majority of its equity funds. But, can this new fund offer deliver? Here’s everything you need to know about the NFO before you invest. The offer closes on November 25.

 

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About AMC

 

Canara Robeco Asset Management Company Ltd. (CRAMC) is a joint venture between the now-defunct Canbank Mutual Fund and Robeco Groep N.V.

 

  • Canbank Mutual Fund

 

Canbank Mutual Fund was Canara Bank’s asset management company (AMC) when it was founded in 1987. It is India’s second oldest mutual fund.

 

  • Robeco Groep N.V.

 

Robeco Groep N.V. is a worldwide asset management firm founded in 1929. It began as the asset management division of Rabobank, a Dutch multinational banking and financial services corporation. Cooperation between the two companies began in 1990. Robeco was later purchased by Rabobank in 2001.

 

Orix Europe purchased 90.01% of Robeco from Rabobank in 2013 for an estimated $2.7 billion. In 2016, the former bought the remaining 9.99% of the shares. Orix Europe is a subsidiary of Orix Corporation, a Japanese financial services conglomerate.

 

Robeco Groep N.V. now has 15 offices worldwide and employs over 900 people. It manages an AuM of €179 billion as of March 2019.

 

Robeco Groep N.V. had a net revenue of €582.6 million, a profit before tax of €109.9 million, and a profit after tax of €87.5 million in the fiscal year 2017-18.

 

Canara Robeco Asset Management Company Ltd. is a company that manages assets (CRAMC)

 

Canbank Mutual Fund sold 49% of its shares to Dutch investment management firm Robeco Groep N.V. in 2007 for Rs. 115 crores to create the Canara Robeco Asset Management Company Ltd. (CRAMC).

 

The organisation provides a diverse range of investment alternatives, including hybrid and monthly income funds, a variety of debt and treasury funds, and themed and diversified equity schemes.

 

The AMC had a net income of Rs. 10915.37 Lakh in FY 2017-18, a profit before tax of Rs. 3240.56 Lakh, and a profit after tax of Rs. 2270.50 Lakh.

 

The AMC has 22 branches in India. It has Rs.55,14,9.07041 crores with average assets under management as of September  2022.

 

Canara Robeco Mid Cap Fund NFO Details

 

The CRMF’s investment goal is to achieve capital appreciation by investing in mid-cap companies. The scheme would invest at least 65 per cent of the funds in shares of mid-cap companies with market capitalisations ranging from 101 to 250 on the BSE. Ajay Khandelwal and Shridatta Bhandwaldar will oversee the fund. The scheme’s benchmark will be the S&P BSE 150 Mid Cap Index TRI.

 

NFO Open Date 11 Nov, 2022
Offer Close 25 Nov, 2022
Unit Price Rs. 10
Minimum Lumpsum Investment Rs.5,000
Minimum SIP Investment Rs.1,000
Exit Load 1.0% if withdrawn within 365 Day(s)
Scheme Type Equity
Fund Option Canara Robeco Mid Cap Fund (G)
Benchmark S&P BSE 150 MidCap TR INR
Lock In Period NIL

 

About Canara Robeco Mid Cap Fund NFO Fund Managers

 

  • Mr Shirdatta Bhandwaldar

 

  • Qualification & Experience

 

    • 14 years of experience overall
    • Canara Robeco Asset Management Company Ltd. Fund Manager – Equities (July 2016 till September 2019)
    • Managing Director of Research and Portfolio at SBI Pension Funds Pvt. Ltd. (July 2012 till June 2016).
    • Heritage India Advisory Pvt. Ltd. senior equity analyst (October 2009 till June 2012).
    • With Motilal Oswal Securities, research analyst (January 2008 till September 2009).
    • Associate Researcher at MF Global Securities (April 2006 till December 2008).

 

  • Ajay Khandelwal

 

  • Qualification & Experience:

 

    • Age / Qualification: 42 Years / PGDBM (Finance & Marketing)
    • Total Experience 17 Years
    • BOI AXA Mutual Fund

             – Fund Manager (December 2017 to November 2021)

             – Research Analyst (April 2010 to November 2017)

    • B&K Securities

              – Equity Sales ( January 2008 to April 2010)

    • Infosys

             – Implementation Consultant (June 2005 to December 2007)

 

What Works?

 

The scheme’s mid-cap portfolio will be home to high-growth leaders in areas that are projected to gain from domestic economic development. The fund managers will also invest in firms that have been regularly compounding their earnings and are projected to do so in the future. The third component of the mid-cap portfolio will include cyclical firms with stronger cash flows, higher return on capital from company turnarounds, or industry cycle revival.

 

To begin, the fund managers plan to establish a balanced portfolio with no one stock holding exceeding 4%.

 

Shridatta Bhandwaldar, head of equities and fund manager, described the fund as having three sorts of buckets. The first bucket will concentrate on high-growth enterprises by identifying leaders and benefactors of domestic growth.

 

Companies in the second bucket would have strong franchise longevity, high cash-flow production, low capital intensity, and low financial debt.

 

Bhandwaldar noted that the third category will focus on cyclical benefit enterprises with increased cash flows, stronger return on capital, or industry cycle revival.

 

Investing in mid-cap equities provides exposure to emerging high-growth industries while providing larger returns than large-cap firms. Quick-service restaurants, diagnostics businesses, capital goods, retail, and transportation are examples.

 

What Does Not Work?

 

Mid-cap stocks are volatile and may be suitable for investors with high risk tolerance. They can be unsettling in the short term, particularly during volatile times.

 

The World Of Mid-cap

 

Most investors invest in midcaps with the expectation that companies would eventually develop and become large-caps. While some do succeed, a few fail and significantly deplete the riches of society. However, in the long run, midcaps have nonetheless performed admirably compared to the underlying risks.

 

Stocks in India’s midcap universe fall into the market capitalization rankings of 101–250.

 

The midcap market is more varied than the large-cap market since more industries are represented there, including manufacturing, specialty chemicals, home improvement, materials, and road infrastructure.

 

The S&P BSE 150 Midcap index will serve as the benchmark for the Canara Robeco Midcap fund.

 

Macro variables, company-specific data, and management visits will be the cornerstone of its well-defined stock selection method, which will be used to focus on the best firms.

 

Investors should be aware of a few key elements in the BSE 150 Midcap, the investing universe.

 

Nearly 78% of the equities in the index rely on domestic variables, including demography, financialization, urbanisation, and rising income levels, to determine their fortunes. In turn, these factors generate demand across a range of industries. Midcaps with domestically reliant elements may do better given that the Indian economy is projected to develop at 6-7% even in a challenging macroeconomic climate.

 

Over 40% of the weight in the large-cap indexes is typically allocated to equities from the energy, IT, and financial sectors. The BSE 150 Midcap is a more diverse basket because only around 25% of its weight is allocated to these sectors.

 

The return on equity of the index’s constituent firms increased from 15% in FY15 to about 18% in FY22.

 

From FY13 to FY22, interest coverage grew from 6 to 24 times. The ratio of net debt to equity decreased from around 0.35 times in FY13 to approximately zero in FY22. 

 

 A SIP in the BSE 150 Midcap during the previous ten years would have generated 18% IRR.

 

How Other Midcap Funds Have Performed

 

Midcap funds, like large-cap funds, receive criticism since many of their schemes underperform benchmarks; nonetheless, midcap funds also have their fair number of underperformers.

 

Over the last three years, 10 of 23 (over 43 per cent) midcap funds have underperformed the BSE 150 Midcap TRI and Nifty Midcap 150 TRI. Over a five-year period, the underperformance figure rises to 11 of 21 funds (more than 52%) and as high as 12 of 20 schemes (60%).

 

As a result, fund selection is critical for exceeding the benchmark and creating considerable alpha.

 

Other Canara Robeco Equity Funds’ 3-year Performance

 

  • Canara Robeco Small Cap Fund Direct Growth 

 

Canara Robeco Small Cap Fund Direct Growth is a Canara Robeco Mutual Fund Equity Mutual Fund Scheme. On December 19, 1987, this scheme was made accessible to investors. Canara Robeco Small Cap Fund Direct Growth fund is currently managed by Cheenu Gupta. The fund presently has an AUM of Rs. 47,886 Cr, and the latest NAV as of November 22, 2022, is Rs. 26.22. The Canara Robeco Small Cap Fund Direct Growth has a risk rating of Very High. The minimum SIP investment is Rs.1,000. Lumpsum requires a minimum investment of Rs.5,000. If redeemed within one year, the exit load is 1%.

 

Fund Name Category Fund Size (in Cr) 1Y Returns 3Y Returns 5Y Returns
Canara Robeco Small Cap Fund Direct Growth Equity 4,063 12.82% 40.23% NA

 

  • Canara Robeco Infrastructure Direct Growth

 

Canara Robeco Infrastructure Direct Growth is a Canara Robeco Mutual Fund Equity Mutual Fund Scheme. On December 19, 1987, this scheme was made accessible to investors. Canara Robeco Infrastructure Direct Growth fund’s current fund manager is Yogesh Patil. The fund presently has Rs. 47,886 Cr in assets under management (AUM), and the latest NAV as of 22 Nov 2022 is Rs. 90.73.

Canara Robeco Infrastructure Direct Growth has a risk rating of Very High. The minimum SIP investment is Rs.1,000. Lumpsum requires a minimum investment of Rs.5,000. If redeemed within one year, the exit load is 1%.

 

Fund Name Category Fund Size (in Cr) 1Y Returns 3Y Returns 5Y Returns
Canara Robeco Infrastructure Direct Growth Equity 248.50 13.73% 24.77% 11.55%

 

  • Canara Robeco Equity Tax Saver Direct Growth 

 

Canara Robeco Equity Tax Saver Direct Growth is a Canara Robeco Mutual Fund Equity Mutual Fund Scheme. On December 19, 1987, this scheme was made accessible to investors. Canara Robeco Equity Tax Saver Direct Growth fund is currently managed by Ravi Gopalakrishnan and Yogesh Patil. The fund presently has an AUM of Rs.47,886 Cr, and the latest NAV as of November 22, 2022 is Rs.128.66. Canara Robeco Equity Tax Saver Direct Growth is a very high risk investment. The minimum SIP investment is Rs.500. Lumpsum requires a minimum investment of Rs.500.

 

Fund Name Category Fund Size (in Cr) 1Y Returns 3Y Returns 5Y Returns
Canara Robeco Equity Tax Saver Direct Growth  Equity 4,407.33 3.32% 22.45% 16.69%

 

  • Canara Robeco Emerging Equities Fund Direct Growth

 

Canara Robeco Emerging Equities Fund Direct Growth is a Canara Robeco Mutual Fund Equity Mutual Fund Scheme. On December 19, 1987, this scheme was made accessible to investors. Canara Robeco Emerging Equities Fund Direct Growth fund is currently managed by Ravi Gopalakrishnan and Kartik Mehta. The fund presently has Rs.47,886 Cr in assets under management (AUM), and the latest NAV as of 22 Nov 2022 is Rs. 182.84. The Canara Robeco Emerging Equities Fund Direct Growth has a risk rating of Very High. The minimum SIP investment is Rs.1,000. Lumpsum requires a minimum investment of Rs.5,000. If redeemed within one year, the exit load is 1%.

 

Fund Name Category Fund Size (in Cr) 1Y Returns 3Y Returns 5Y Returns
Canara Robeco Emerging Equities Fund Direct Growth Equity 15,580.76 2.70% 21.64% 13.34%

 

What Should Investors Do?

 

Mid-cap funds must be included in the asset allocation of long-term investors based on their risk tolerance.

 

Before investing in a new fund, it must first establish a track record. Canara Robeco Mutual Fund has been choosy in its fund launches. Its most recent equity fund launches, the Canara Robeco Value Fund and the Canara Robeco Focused Equity Fund, have provided investors with solid returns.

 

Prior to the scheme’s reclassification in 2018, the fund house operated a fund named the Canara Robeco Emerging Equities Fund, which focused on mid-cap equities. This was then moved to the large- and mid-cap category.

 

Given Canara Robeco’s equity funds’ good track record, high-risk investors might consider investing in the NFO through the SIP method.

 

FAQs

 

  • How Can You Begin Canara Robeco Mutual Fund SIP Online?

 

Without any difficulties, one can begin investing in Canara Robeco Mutual Fund online using Kuvera. They can also invest through the websites of respective fund houses. To invest in Canara Robeco Mutual Funds, one might utilise any other online platform or mobile application.

 

  • How To Redeem Canara Robeco Mutual Fund?

 

To redeem Canara Robeco Mutual Funds offline, go to the local fund house and fill out a form. Alternatively, an investor can redeem the investment by visiting the official website and logging in using the folio number. They can also withdraw their Canara Robeco Mutual Fund investments from any online platform like Kuvera where they have deposited funds.

 

  • How Does The New Fund Offer Function?

 

In the case of a new fund offer, the chance to subscribe to the plan is only accessible for a short time. During the pre-defined period, investors may acquire units of the mutual fund scheme and subscribe to the NFO at an offer price. This is typically set at Rs 10. Investors will be able to acquire fund units at the set price after the tenure expires. 

 

  • Is NFO A Good Investment?

 

The fund house uses an NFO to generate funds from the public in order to acquire market instruments such as equity shares, bonds, and so on. Because it is new to the market, NFO is less expensive than current funds. They are similar to Initial Public Offerings (IPOs), in which the general public can acquire shares before they are listed on a stock market. Furthermore, the extensive marketing efforts that go into its promotion make it a can’t-miss occasion. However, before selecting on one, you should use your discretion and intelligence.

 

  • How Can I Raise The Amount Of SIP In Canara Robeco Mutual Fund?

 

Step-up or top-up SIPs can be used to raise the amount of a Canara Robeco Mutual Fund sip. Previously, just a few fund firms offered this service. However, most of them now do, although it is best to verify with the fund house first. If the option is available, it is best to use the Step-up Calculator to compute the SIP Amount before making any decisions.

 

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