canara robeco equity diversified fund

MARCH 2020

CANARA ROBECO EQUITY DIVERSIFIED FUND

This product is suitable for investors who are seeking*

• Capital appreciation over long term• Investment in equity and equity related instruments

across large cap, mid cap, small cap stocks

Multi Cap Fund - An open-ended equity scheme investing across large cap, mid cap, small cap stocks

*Investors should consult their financial advisers if in doubt aboutwhether the product is suitable

Canara RobecoEquity Diversified Fund

Diversification- An Approach

• Benefits of Diversification

• Risk-Reward Matrix

Canara Robeco Equity Diversified

• Investment Strategy

• Portfolio Snapshot

• Performance at a glance

Product Positioning

Why Canara Robeco Equity Diversified Fund

Fund Facts

CONTENTS

ARE MARKETS PREDICTABLE?

Sector performance varies based on the economic conditions

*Illustration for Diversified Index is a basket of 200 financially sound companies, drawn from various sectors of the Indian Economy.Source: ICRA MFI Explorer. Chart shows calendar year returns for Top 2 and Bottom 2 performing S&P BSE Sector indices. CY20-YTD is till March 31, 2020

Diversificationrenders cushioning against The volatility

2014 2015 2016 2017 2018 2019 CYTD 2020

BEST Performer

CD TRI[67.33%]

CD TRI[24.79%]

Metal TRI[43.19%]

Realty TRI[107.24%]

IT TRI[27.09%]

Realty TRI[24.82%]

HealthcareTRI

[-9.18%]

2nd BESTBankTRI

[67.07%]

HealthCare TRI

[15.62%]

Oil & Gas TRI

[30.38%]

CDTRI

[102.87%]

FMCG TRI

[12.05]

Energy TRI[24.12%]

FMCG TRI[-10.01%]

Diversified Index*

37.45% -0.18% 5.37% 34.97% 0.81% 8.63% -28.81%

2nd WORSTMetal

TRI[9.55%]

Realty TRI

[-12.82%]

Health Care TRI

[-12.43%]

IT TRI

[13.29%]

RealtyTRI

[-30.55%]

Auto TRI[-9.48%]

Auto TRI[-41.26%]

WORSTRealty

TRI[9.37%]

Metal TRI

[-28.85%]

Telecom TRI

[-20.95%]

HealthCare TRI

[1.10%]

Telecom TRI

[-39.03%]

MetalTRI

[-9.49%]

MetalTRI

[-43.62%]

Timing & predicting the market is a tough call; so diversification across various sectors reduces risk over time. Diversified Index: S&P BSE 500 TRI, IT- Information Technology TRI, CD- Consumer Durables TRI, CG- Consumer Goods TRI

Diversified Index – S&P BSE 200 TRI ; Large Cap – S&P BSE Large Cap TRI; Mid Cap - S&P BSE MID CAP TRI; Small Cap - S&P BSE Small Cap TRI.

Source: ICRA MFI Explorer. Performance shown above is CAGR (%) and is for the Calendar Year. 2020-YTD is till March 31, 2020

Chart shows calendar year returns for select indices

TOP

BOTTOM

Perf

orm

ance

Investing across market-cap helps reduce the extremes!

DIVERSIFICATION & ITS IMPORTANCE

Portfolio allocation across market cap may result in lower exposure to risk, at the same time help boost the returns

2014 2015 2016 2017 2018

Small Cap TRI[71.13%]

Mid Cap TRI[8.72%]

Mid Cap TRI[9.28%]


Large Cap TRI[3.65%]

Mid Cap TRI[56.91%]


Diversified Index TRI

[5.37%]

Mid Cap TRI[49.90%]

Diversified Index TRI[0.81%]


Diversified Index TRI[-0.18%]



Mid Cap TRI[-12.47%]


Large Cap TRI[-2.73%]



Small Cap TRI[-22.82%]

2019 2020 YTD


Diversified Index TRI[-28.81%]


Large Cap TRI[-28.87%]

Mid Cap TRI[-1.98%]

Mid Cap TRI[-29.04%]



Diversified Fund– S&P BSE 200 TRI ; Large Cap – S&P BSE Large Cap TRI; Mid Cap - S&P BSE MID CAP TRI; Small Cap - S&P BSE Small Cap TRI. Source: ICRA MFI Explorer. Period considered – 10 years: 31

stMar’10 – 31

stMar’20. Returns greater than 1 year period are in CAGR. The above graph shows the performance as an average of various periods (3,5,7

and 10 years) rolling return.

NO MARKET CAP BIAS IS THE BEST STRATEGY TO BUILD LONG TERM WEALTH

Diversification captures opportunities across market capitalisation

Diversified index[market cap agnostic]

Outperformed large aswell as small caps

across alltime periods

0.00%

2.00%

4.00%

6.00%

8.00%

10.00%

12.00%

14.00%

3 Years 5 Years 7 Years 10 Years

Diversified Index Large Cap Mid Cap Small Cap

Rolling return for 3yr, 5yrs, 7yrs and 10yrs period on daily frequency from 31st Mar’20 –31st Mar’20. Returns greater than 1 year period are compounded annualized. Note: The above graph shows the performance on a daily rolling return basis to compute returns for respective periods (3,5,7 and 10 years). Source: ICRA MFI Explorer. Past performance may or may not be sustained in future.

TAKING A DIVERSIFIED APPROACH REDUCES THE “RISK OF LOSS” SIGNIFICANTLY

Historically, no instances of loss over long term (for investments held for 7 Years and 10 Years)

Possibility of loss reduces

to “Zero” over long

term

Period 3 Years 5 Years 7 Years 10 Years

Probability of +ve Return 95.17% 98.09% 100.00% 100.00%

Probability of -ve Return 4.83% 1.91% 0.00% 0.00%

11.70% 11.10% 11.43%11.34%

-10.00%

-5.00%

0.00%

5.00%

10.00%

15.00%

20.00%

25.00%

30.00%

35.00%

40.00%

3 Years 5 Years 7 Years 10 Years

S&P BSE 500 TRI - Rolling Returns (%)

For Illustration Purpose Only. Period considered is from 31st Mar’20 – 31st Mar’20. Average of 1 year rolling return for sectoral indices under S&P BSE is taken for comparison.Diversified Index – S&P BSE 200 TRI. Source: ICRA MFI Explorer as on 31st Mar’20. CAGR Returns.

DIVERSIFICATION REDUCES THE VOLATILITY OVER LONG TERM

Diversification renders flexibility to invest across sectors/themes and may perform well in different market conditions with relatively lower risk

Diversificationprovides better

risk adjusted return opportunity

-5.00 0.00 5.00 10.00 15.00 20.00 25.00 30.00 35.00 40.00

Diversified

S&P BSE Auto TRI

S&P BSE Bankex TRI

S&P BSE CD TRI

S&P BSE CG TRI

S&P BSE Energy TRI

S&P BSE Finance TRI

S&P BSE FMCG TRI

S&P BSE HC TRI

S&P BSE Industrials TRI

S&P BSE IT TRI

S&P BSE Metal TRI

S&P BSE Oil & Gas TRI

S&P BSE Power Index TRI

S&P BSE Realty TRI

S&P BSE Telecom TRI

Return vs. Volatility

Last 10 Yrs Avg 1Yr Volatility Last 10 Yrs Avg 1Yr Rol Ret (%)

RISK-REWARD MATRIX

Multi Cap Funds have high risk as well as high reward as compared to Large Cap Funds

Balanced Fund

Thematic Funds

Large & Mid Cap

Funds

Large Cap Fund

Index Funds

Multi Cap Funds/ ELSS

VO

LATI

LITY

RETURN

LOW MEDIUM HIGH

Multi Cap funds primarilyinvest in equities (Large, Mid &Small market capitalization)

Equity investments are spreadacross various sectors andcompanies based on notion ofrisk diversification

Choose DIVERSIFICATIONwith a Long Term Viewto capitalise on Wealth Creation Opportunity!

Canara RobecoEquity Diversified Fund

Presenting

Competent Management

Reasonable Valuations

Robust Business Fundamentals

INVESTMENT PROCESS

Investment Universe

Macro Research

• Macro Research & Intelligence

• Identification of themes

• Tracking business cycles

Stock - Specific Ideas

• In-house fundamental research

• Management meetings

• Sell-side research and sector specialists

• Behavioral screener

IDEATE SCREEN DESIGN

Final Portfolio

Internal Risk Management Limits• Tracking Error• Ratio Var• Beta Monitoring

Investment Mandate

• Market Cap of the

stock

Regulatory Limits

• Individual Stock

Limits

Investible Ideas

3 Steps investment process designed to achieve the investment objective in a disciplined manner

Investment Recording

• Captain’s Log

Investment Checklist

PORTFOLIO CHARATCTERISTIC:

Quality is the underlying feature of the portfolio

Focus on intrinsic value

Quality Managem

ent

Quality businesses

Capital efficient business with

opportunity to re-deploy profits at a

high rate of returns benefitting in

high RoCEs and RoEs from these

businesses

Quality measuring parameters

considered such as Corporate

Governance, Capital allocation and

execution track record

For a quality growth business and management: • Willing to pay reasonable valuation in an endeavour to create

long term compounding• Control valuation exuberance through weight management

rather than exiting these businesses

THE FUND’S PORTFOLIO CONSTRUCT

Businesses have compounding of earnings characteristics due to scale

of the industry and competitive position of the

company within it

Source of compounding:

Scale, Brands, Distribution network, Network effect, patent or regulatory edge

etc (or even sheer execution superiority) and

keep delivering over a considerable period

Businesses have disproportionate

earnings growth for next 1-2 years driven by:

-- Turnaround in industry (reduction in

competitive pressures)

-- Company (operating and financial leverage)

-- Cyclical upturns in earnings, newer themes

getting listed etc.

- Management with question mark on integrity and track

record of misallocation of capital

-- Leveraged turnarounds in a

cyclical sector

-- Value buys without identifiable (on timeline

and factors) drivers

-- High growth with very high working capital

WH

AT

AR

E CO

MP

OU

ND

ERS

WH

AT

AR

E A

PLH

A G

ENER

ATO

RS

WH

AT

WE

AV

OID

Compounders Alpha Generators Exclusions

Note: The above-mentioned allocation could change based on context of overall growth environment. Some of

these businesses might move to compounders bucket over period

Current Themes in Portfolio

Overweight Criteria

Consumption

[Necessity +Aspiration +Financing

Availability]

Premiumisation in FMCG, Consumer Durables,

Consolidation in Retailers

Leader Lenders

[Beneficiary of weak competition]

Banks/NBFCs with edge in Management,

Capital, Liabilities and execution

Domestic Pharma

[Structural Growth story]Quasi staples

Speciality Chemicals Beneficiary of moving up the value chain and

supply chain readjustments

Gas Value Chain Cleaner is better

Beneficiaries of financialization of

savings Medium term trend is here to stay

Infrastructure Playing through Cement and Automation

Data as on 31st Jan'20

Underweight Criteria

Metals, PSU Banks, US Generic,

OMCs and Upstream and IT

Staying away from deep cyclicals and broken business models

The fund aims to provide an investment

opportunity in the "best in class" Indian

companies with sustainable business models

to gain for the India Growth Story. These

companies are selected based on "Top

Down" as well as "Bottom Up" research

based approach

WHY CANARA ROBECO EQUITY DIVERSIFIED FUND?

Focused on large caps with few high conviction mid-cap and small cap ideas – Large -cap companiesaims to render stability and liquidity to the portfolio and select mid and small cap companies yieldhigher returns in the long term as the companies grow in size and in market capitalization

Investment Style – Fund follows GARP (Growth at Reasonable Price) style of investing

Investor Profile – The fund should form the ‘CORE’ part of an investor’s equity portfolio.

PORTFOLIO SNAPSHOT

Asset Allocation

Top 5 Sector break up (% to NAV)Top 10 Holdings

Industry Classification

% of Net Assets

HDFC Bank Ltd Banks 7.49%

ICICI Bank Ltd Banks 6.15%

Reliance Industries LtdPetroleum Products 5.25%

Infosys Ltd Software 4.84%

Hindustan Unilever LtdConsumer Non Durables 3.95%

Housing Development Finance Corporation Ltd Finance 3.88%

Kotak Mahindra Bank Ltd Banks 3.68%

Divi's Laboratories Ltd Pharmaceuticals 2.74%

Axis Bank Ltd Banks 2.68%

Bajaj Finance Ltd Finance 2.68%

A concentrated portfolio with 49 stocks Top 5 Sectors: 60.37% Top 10 Stocks: 43.34%

Data as on 31st Mar’20

Equities I 93.95%

Money Market Instruments I 6.49%

Others I -0.44%

0% 5% 10% 15% 20% 25%

Banks | 20.71%

Consumer Non Durables |12.06%

Finance | 10.73%

Pharmaceuticals | 8.44%

Software | 8.43%

PORTFOLIO SNAPSHOT


Investment Style

Large Cap Mid Cap Small Cap

Growth Value Blend

Diversified Thematic Sector

Quantitative Information

Criteria Values

Standard Deviation 18.48

Portfolio Beta 0.90

Portfolio TurnoverRatio

0.6 times

R-Squared 0.93

Sharpe Ratio -0.01

Focus on blue chip companies by investing inTop 100 companies based on marketcapitalisation

Fund focuses on companies and sectors thatare expected to perform better than thegeneral market

Fund uses inputs from internal quant modelto identify investable companies

Market Capitalisation (%)

68.97%

21.08%

3.90%6.05%

Large Cap

Mid Cap

Small Cap

Debt, Cash &Others

PRODUCT POSITIONING

Above positioning is for illustration purpose only

Multi Cap

Large Cap

Large & Mid Cap

Thematic

ELSS

CR Equity Diversified

Fund

CR Blue Chip

Equity Fund

CR Emerging Equities

CRInfrastructure

CR Consumer

Trends Fund

CR Equity Tax Saver

Fund

SATELITE PORTFOLIO

CORE PORTFOLIO

NEED BASED

Past performance may or may not be sustained in future. Information is historical and may not reflect current or future portfolio characteristics. Portfolio holdings are subject to change. Data as on 31

stMar’20.

FUND CAPITALISING ON OPPORTUNITIES ACROSS MARKET CAP AS WELL AS SECTORS

Fund is focussedon identifying opportunities

across market cap

Market Cap Trend: QoQ (%) to Net Asset

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Jun

-15

Sep

-15

Dec

-15

Mar

-16

Jun

- 16

Sep

- 16

Dec

- 16

Mar

- 17

Jun

- 17

Sep

- 17

Dec

- 17

Mar

-18

Jun

-18

Sep

-18

Dec

-18

Mar

-19

Jun

-19

Sep

-19

Dec

-19

Mar

-20

M-C

ap A

lloca

tion

(%

)

Large Cap Mid Cap Small Cap Debt & Cash & Others

Period Returns (%) Current Value of Standard Investment of Rs.10,000 in the

Scheme S&P BSE 200 TRI#

S&P BSE Sensex TRI##

Scheme S&P BSE 200 TRI#

S&P BSE Sensex TRI##

Last 1 Year -16.57% -26.27% -22.69% 8,330 7,354 7,714

Last 3 Years 2.41% -2.98% 1.07% 10,742 9,130 10,326

Last 5 Years 2.78% 1.41% 2.41% 11,470 10,725 11,265

Since inception (CAGR) 15.74% 13.25% 14.99% 1,12,450 79,137 1,00,922

#Scheme Benchmark, ##Additional Benchmark . Load is not taken into consideration for computation of returns. Returns of dividend option under the scheme for the investor would be net of distribution tax as applicable. The performance of other funds managed by fund manager of Canara Robeco Equity Diversified is on the slide number 23.

PERFORMANCE AT A GLANCE

FUND VS BENCHMARKS

Canara Robeco Equity Diversified: Rs. 1,12,450 on an investment of Rs.10,000 since inception

The past performance may or may not be sustained in the future. Returns are based on growth NAV of Regular plan and are calculated on compounded annualized basis for a period of more than (or equal to) a year and absolute basis for a period less than a year. Inception Date: September 16, 2003 . Different plans have a different expense structure . The performance details provided herein are of Regular Plan. The current fund managers Mr. Shridatta Bhandwaldar is managing the scheme since 05-Jul-16 and Mr. Miyush Gandhi is managing the Scheme since 01-Oct-2019. Performance as on 31

stMar’20.

Investment date is taken to be 1st of the month or subsequent day if 1st is a holiday and investment of Rs.10,000 is taken. Returns are as on 31st Mar’20 and are CAGR. The calculationsare based on the regular growth plan NAVs. Past performance may or may not be sustained in the future. Scheme Benchmark# , Additional benchmark##. Inception Date:September 16, 2003

PERFORMANCE AT A GLANCE

SIPCanara Robeco Equity Diversified has outperformed the benchmark

& S&P BSE SENSEX over long term

Canara Robeco Equity Diversified

1 Year 3 Years 5 Years 7 Years 10 Years SinceInception

Total Amt invested (INR) 1,20,000 3,60,000 6,00,000 8,40,000 12,00,000 19,90,000

Market Value (INR) 98,999 3,21,810 6,10,844 9,87,098 17,22,397 56,46,247

-50%

-40%

-30%

-20%

-10%

0%

10%

20%

1 Year 3 Years 5 Years 7 Years 10 Years Since Inception

Canara Robeco Equity Diversified Fund S&P BSE500 TRI # S&P Sensex ##

FUND FACTS

Category/ Type of Scheme

Open Ended Equity Scheme

InvestmentObjective

To generate capital appreciation by investing in equity and equity related securities. However, there can be no assurance that the investment objective of the scheme will be realized.

Inception Date 16-Sep-03

Asset Allocation Equity & Equity Related Instruments - 65% to 100% (Risk- High)Debt and money- market instruments - 0% to 35% (Risk- Low to medium)Reits/Invits- 0% to 10% (Risk- Medium to High)

Plans/OptionsRegular & Direct Plan:

Options: Growth / Dividend with payout & Reinvestment

Facilities SIP/ STP/ SWP/ Dividend Transfer Facility

Fund Size Rs. 1,601.32 Crs (Month End AuM)

Load StructureExit Load:1% - if redeemed/switched out within 1 year; Nil- if redeemed/switched out after 1 year

Benchmark S&P BSE 500 TRI

Fund Manager Mr. Shridatta Bhandwaldar, Mr. Miyush Gandhi


Performance of Fund Manager


The information used towards formulating the outlook have been obtained from sources publishedby third parties. While such publications are believed to be reliable, however, neither the AMC, itsofficers, the trustees, the Fund nor any of their affiliates or representatives assume any responsibilityfor the accuracy of such information. CRMF, its sponsors, its trustees, CRAMC, its employees, officer,directors, etc. assume no financial liability whatsoever to the user of this document. Mutual FundInvestments are subject to market risk. Investors are requested to read the Scheme relateddocuments carefully before investing.

Mutual Fund investments are subject to market risks, read all Scheme relateddocuments carefully.

DISCLAIMER

canara robeco equity diversified fund

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