Last Updated on December 29, 2021 at 6:31 pm
In this article, we evaluate the performance consistency of Canara Robeco Emerging Equities, a large and mid cap fund. Launched in March 2005, the fund currently has an AUM of Rs. 11,774 Crores.
As one can see from the Market cap allocation history below, Canara Robeco Emerging Equities Fund has been a large and mid cap fund even before the advent of SEBI mutual fund categorisation rules. After this, the fund has gradually increased mid cap allocation.
With effect from 1st Jan 2019, the fund has rightly changed its benchmark from S&P BSE 200 TRI (a market-cap-weighted large-like index) to Nifty Large Midcap 250 TRI (equal exposure to large and mid cap stocks).
We will use three metrics to analyse performance consistency with respect to the fund’s benchmark. The data is taken from the Equity Mutual Fund Screener Nov 2021: Shortlist consistent performers
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1 Rolling return outperformance consistency: the fund returns are compared with category benchmark returns over every possible 3Y,4Y, 5Y period. Higher the outperformance consistency, the better. Suppose 876 fund returns were compared with 876 benchmark returns, and the fund has beaten the benchmark 675 times. The consistency score will be 675/876 ~ 77%.
Three years
- No of rolling return entries Index (3 Years) 1436
- No of rolling return entries Fund (3 years) 1436
- No of times fund has outperformed the index (3 years) 1436
- rolling return outperformance Consistency Score (3 years) 100%
Four years
- No of rolling return entries Fund (4 years) 1189
- No of rolling return entries Fund (4 years) 1189
- No of times fund has outperformed the index (4 years) 1186
- rolling return outperformance Consistency Score (4 years) 99%
Five years
- No of rolling return entries Index (5 Years) 942
- No of rolling return entries Fund (5 years) 942
- No of times fund has outperformed the index (5 years) 942
- rolling return outperformance Consistency Score (5 years) 100%
That is indeed an excellent performance. Please note this is based on past data and does not reflect future performance.
2 Upside performance consistency over every possible 3Y,4Y, 5Y: Higher the better. A score of 70% means, 7 out of 10 times, the fund performed better than the category benchmark when the benchmark was moving up. This is a measure of reward. It is computed from rolling upside capture data (see link below).
- upside performance consistency (3 years) 82%
- upside performance consistency (4 years) 97%
- upside performance consistency (5 years) 96%
Canara Robeco, Emerging Equities Fund, has excellent upside performance. When the index moved up in the past, the fund did typically did better.
3 Downside performance consistency over every possible 3Y,4Y, 5Y. Higher, the better. A score of 60% means, 6 out of 10 times, the fund performed better than the category benchmark when the benchmark was moving down. This is a measure of risk protection. It is computed from rolling downside capture data. Read more: An introduction to Downside and Upside Capture Ratios.
- downside protection consistency (3 years) 58%
- downside protection consistency (4 years) 66%
- downside protection consistency (5 years) 51%
Canara Robeco Emerging Equities Fund does not typically fall lesser than the index. Not many funds have this kind of combination: good return outperformance + good upside performance + poor downside performance. See: Strange, but true! How mutual funds beat the index!
In summary, Canara Robeco Emerging Equities Fund is a large and mid cap fund with sizeable mid cap stock exposure (~ 40%). The fund has a good track record with respect to Nifty LargeMidcap 250 index. Those who value return performance over downside protection may consider it with the standard past performance caveat.
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