Canara Robeco Equity Tax Saver

Though around for a long time, it emerged as a strong contender only from 2007. After average performances in 2005 and 2006, the fund beat its category in 2007 and has done it every year since. That coincided with the Robeco group taking a stake in Canbank Mutual Fund in October 2007 and Anand Shah taking over as a fund manager in September 2008.


The fund manager ensures a diversified portfolio with no market cap or sector bias. The fund invests in growth-oriented companies with strong fundamentals.



Shah has transformed the fund into a diversified and consistent offering. When he took over the fund, he restructured the portfolio to make it focused towards domestic consumption. He has also been pretty successful in utilising the agility that a small fund offers by spotting opportunities and capitalising on them. When he joined in September 2008, he cut down the exposure to Metals to again increase it within two months and finally offload it almost completely by December 2008. This move, along with increased exposure to Banking, helped the fund gain 15 per cent (highest in its category) in December. The fund’s loss in the December 2008 quarter was just 11 per cent (category average: -23%).

When the market turned in March 2009, Shah was almost fully invested (89% to equity). This coupled with stock picking done in 2008 at attractive prices helped the fund deliver 58 per cent in the June 2009 quarter (category average: 47%).

Portfolio

The fund has evolved from a concentrated and risky offering into a more diversified one. Though allocation to a single stock has gone up to 9 per cent, it is seen only in few large caps. Allocation to the top 5 holdings (23%) is in line with the category average. Shah changes the market cap exposure according to market conditions. In 2010, he halved exposure to mid caps and increased it to large caps (currently at around 65%). However, allocation to small caps has barely exceeded 15 per cent since 2007, a drastic change from its past.



The multi-cap strategy could backfire if his call on the market-cap exposure goes wrong. Though Shah is not averse to going against the herd when following his convictions, the contra bets taken might impact the fund’s performance if they don’t play out well.

Canara Robeco Equity Tax Saver's diversified portfolio has enabled it to beat the category in every year since 2007…

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Canara Robeco Equity Tax Saver

This fund gained a foothold after the Robeco group bought stake in Canbank Mutual Fund. It aims at a balanced portfolio of large- and mid-cap stocks with a growth style of investing. The equity allocation is ranged between 80-100 per cent.

After a good show in 2007, it fell the least in 2008 despite the cash/debt allocation averaging at 11 per cent (peak at 21 per cent). This is well within its investment mandate. It succeeded on investing in the right companies and the fund manager aligned the portfolio to capitalise on domestic demand recovery. This was based on the fiscal stimulus, monetary easing and strength of favourable demographics. 

The scheme rallied in 2009 due to its banking allocation, increased mid-cap exposure and bets on the likes of L&T, BHEL, GAIL, Gujarat State Petronet, HPCL and BPCL. This year, also, it has beaten the category average by a huge margin.

A small asset base helped the scheme take advantage of flexibility to move in and out of sectors/stocks. It buys companies with secular growth opportunities and an objective of staying invested for longer periods of time.

The fund focuses on companies with superior growth. Though it does not shirk smaller fare, the risk-reward profile has led to a large-cap tilt. Excellent performance numbers without undue risk and a compact, diversified portfolio makes it a strong contender.



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