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Canara Robeco Equity Hybrid Fund is an open-ended Aggressive Hybrid Fund that can invest 65% – 80% of its portfolio in equity and equity-related instruments and the rest in bonds. In this review, we evaluate the risk and return performance of the fund with its benchmark and category peers.
History: The scheme began operation in Jan 1993. The oldest factsheet (Nov 2007) from the fund house refers to it as “Canara Robeco Balance II, an open-ended Balance Scheme”. The “II” was to distinguish it from a debt-oriented hybrid fund and was later removed.
In early 2018, to fall in line with the SEBI categorization rule, it became Canara Robeco Equity Hybrid Fund. The equity portion will be predominantly large cap in nature with some midcap and small cap exposure according to the fund brochure. It will combine growth and value styles of investing.
This is the asset allocation history of the fund since Feb 2010.
This is the historical exposure to less than AAA or A1+ rated bonds in the portfolio. It is quite small for concern. The fund will combine buying and holding bonds and also will change the duration of bonds in the portfolio as per interest rate movements.
Next, we shall look at every possible five-year returns for the fund and its category peers from 1st Jan 2013. We shall use two benchmarks: 1: CRSIL 65% Nifty + 35% bonds and 2: NIfty 50. The category peers are hybrid equity funds from SBI, HDFC, ICICI, Mirae and Franklin.
Some of them have also be reviewed independently before:
- SBI Equity Hybrid Fund Review: solid performance but should I invest?
- Mirae Asset Hybrid Equity Fund: Good Going but Should You Invest?
- HDFC Hybrid Equity Fund (HDFC Balanced): Performance Review
There 782 5-year return data points in each line. These five-year investments mature between Dec 2017 to Feb 2020. All the funds have beat the CRISIL index Nifty 50 for most of the period and there is not much to separate them.
Next, we shall consider how many monthly returns have deviated from the average monthly return over the above five-year periods. This is known as a rolling standard deviation chart. Standard deviation is a measure of volatility.
In a rolling returns graph, higher the line, better the performance. In a rolling risk graph, lower the line, lower the risk (fluctuations in NAV)
Amusingly all hybrid funds are more volatile than the CRISIL hybrid index but less volatile than NIfty 50. Again, this makes a case for an equity hybrid index fund.
In summary, Canara Robeco Equity Hybrid Fund has a reasonable track record and is one of those quiet performers. Its AUM has just crossed Rs. 3000 Crores. Investors on the lookout for such a fund can consider it but only for long-term goals.
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