Canara Robeco Manufacturing Fund Overview
The Canara Robeco Manufacturing Fund is a thematic mutual fund that focuses on the manufacturing sector of India. Launched on March 11, 2024, this fund is designed to capitalize on the growth potential of manufacturing companies, particularly in light of government initiatives aimed at promoting this sector.
In this article, we will gather insights for this stock, which will help us, decide the statistics of how it works. Moreover, as of 31st May 2024, it has maintained an AUM of Rs.1374.49 Crores, while giving 24.54% returns since its inception.
Let us start by understanding the investment approach used by this scheme.
What is the Investment Objective of the Canara Robeco Manufacturing Fund?
The primary objective of the Canara Robeco Manufacturing Fund is to generate long-term capital appreciation by investing predominantly in equities and equity-related instruments of companies engaged in manufacturing activities. This aligns with the broader economic goals of enhancing India’s manufacturing capabilities and achieving greater self-reliance.
Performance Analysis of Canara Robeco Manufacturing Fund
As of July 19, 2024, the fund’s Net Asset Value (NAV) stands at ₹12.28. Since its inception, the fund has shown promising returns with a Compound Annual Growth Rate (CAGR) of approximately 26.50%. Over the past month, the fund has delivered a return of 5.48%, outperforming many of its peers in the thematic fund category.
How is the Risk and Investment Horizon of Canara Robeco Manufacturing Fund?
The fund is classified as having a very high risk due to its concentrated investment in the manufacturing sector. Investors should consider a long-term investment horizon, ideally five years or more, to ride out potential market volatility. This long-term perspective helps in mitigating risks associated with short-term market fluctuations.
What is the Expense Ratio and Exit Load for Canara Robeco Manufacturing Fund?
The Canara Robeco Manufacturing Fund has a relatively low expense ratio of 0.44% for its direct plan, which is favorable for investors as it means lower costs. Additionally, there is an exit load of 1% if units are redeemed within 365 days of investment, encouraging investors to hold onto their investments for longer periods to maximize returns.
How Does the Portfolio Composition of Canara Robeco Manufacturing Fund?
The fund primarily invests in equity securities, with a significant allocation to sectors crucial to manufacturing. The sectoral allocation is as follows:
Capital Goods: 30.42%
- The capital goods sector has the highest allocation in the fund’s portfolio, reflecting its importance in the manufacturing ecosystem.
- This sector includes companies involved in the production of machinery, equipment, and infrastructure-related products, such as industrial machinery, heavy electrical equipment, and construction equipment.
- The fund’s focus on capital goods companies is based on the growth potential of this sector, as it is closely tied to the overall economic development and infrastructure spending in the country.
Automobiles: 18.81%
- The automobile sector is the second-largest allocation in the fund’s portfolio, indicating the fund’s conviction in the growth prospects of the manufacturing companies in this industry.
- The automobile sector encompasses companies involved in the production of vehicles, including passenger cars, commercial vehicles, two-wheelers, and related components.
- The fund’s exposure to the automobile sector reflects the strong domestic demand for vehicles, driven by factors such as rising income levels, urbanization, and the growing middle class in India.
Metals & Mining: 8.2%
- The metals and mining sector accounts for a significant portion of the fund’s portfolio, highlighting its importance in the manufacturing supply chain.
- This sector includes companies engaged in the extraction, processing, and production of various metals and minerals, such as steel, aluminium, copper, and iron ore.
- The fund’s investment in the metals and mining sector is driven by the growing demand for raw materials from the manufacturing industries, as well as the potential for growth in this sector.
Materials: 10.35%
- The materials sector, which encompasses companies involved in the production of chemicals, paints, packaging materials, and other intermediate goods, also has a notable allocation in the fund’s portfolio.
- The fund’s focus on the materials sector is based on the critical role these companies play in supporting the manufacturing industries, providing essential inputs and components.
- The materials sector’s performance is closely tied to the overall health of the manufacturing sector, making it a relevant and strategic allocation for the fund.
This diversified approach within the manufacturing sector aims to mitigate risks while maximizing growth potential. The fund typically invests in leading manufacturing companies, including both large-cap and mid-cap stocks.
What is the Recent Performance and Outlook of Canara Robeco Manufacturing Fund?
Outperformance against the benchmark
- The Canara Robeco Manufacturing Fund has outperformed its benchmark, the Nifty India Manufacturing TRI, over the last three months.
- This outperformance demonstrates the fund’s ability to generate higher returns than the broader manufacturing sector index, indicating the effectiveness of its investment strategy.
- The fund’s ability to outperform the benchmark suggests its portfolio management team’s skill in selecting and allocating capital to the most promising manufacturing companies.
Strong short-term returns
- Over the last three months, the Canara Robeco Manufacturing MF has delivered a return of 21.63%, significantly higher than the category average of 15.89%.
- The fund’s ability to generate such strong short-term returns highlights its responsiveness to the prevailing market conditions and its agility in capitalizing on the opportunities within the manufacturing sector.
- This short-term performance suggests the fund’s investment approach is well-suited to navigate the current market environment and potentially generate attractive returns for its investors.
Robust investment strategy
- The fund’s outperformance over both the benchmark and the category average indicates the robustness of its investment strategy.
- The fund’s investment team likely has a deep understanding of the manufacturing sector, allowing them to identify and invest in the most promising companies with strong growth potential.
- The fund’s diversified portfolio, which likely encompasses a mix of large-cap, mid-cap, and small-cap manufacturing companies, may have contributed to its ability to generate superior returns.
Capitalizing on favorable market conditions
- The Canara Robeco Manufacturing Fund’s strong performance suggests its ability to capitalize on the prevailing favorable market conditions in the manufacturing sector.
- Factors such as improved economic outlook, increased government focus on the manufacturing sector, and the revival of domestic and global demand may have contributed to the fund’s outperformance.
- The fund’s investment strategy and portfolio composition have enabled it to take advantage of these favorable market conditions and deliver superior returns to its investors.
How Does the Canara Robeco Manufacturing Fund Run through the Economic Cycle?
The Indian manufacturing sector is experiencing significant growth due to favourable government policies, including production-linked incentives and initiatives like “Make in India.” These policies aim to boost domestic production and enhance export potential, creating a positive environment for funds focused on manufacturing.
Conclusion
Investing in the Canara Robeco Manufacturing Mutual Fund could be a strategic move for those looking to capitalize on the growth of India’s manufacturing sector. Invest via a SIP Plan to maximize your profits in the portfolio.
The fund’s strong recent performance, low expense ratio, and focus on long-term capital appreciation present an attractive opportunity for investors willing to accept higher risk for potentially higher returns. However, as with any investment, it’s crucial for investors to conduct thorough research and consider their risk tolerance and investment horizon before committing funds.