Canara Robeco Asset Management Company on Friday launched a new fund offer (NFO for its Canara Robeco Mid Cap Fund, an open-ended equity scheme that would predominantly invest in equity and equity-related instruments of mid-cap companies.
The NFO will stay open for subscription from Nov 11 to 25, 2022.
In a press release, Canara Robeco AMC managing director (MD) and chief executive officer (CEO) Rajnish Narula said the fund offers "an attractive opportunity to create wealth" through lumpsum and SIP modes in the long term. He added investors with a five-year or more investment horizon could "benefit from risk-adjusted returns."
How the Canara Robeco Mid-Cap Fund Works
Detailing the fund, Shridatta Bhandwaldar, head of equities & fund manager, said the portfolio would comprise three types of buckets. The first bucket will focus on high-growth companies by identifying leaders and domestic growth beneficiaries.
The second bucket would comprise companies with solid franchise durability, high cash-flow generation, low capital intensity, and minimal financial leverage.
The third bucket would focus on cyclical beneficiary companies with improved cash flows, higher return on capital, or industry cycle revival, Bhandwaldar added.
The fund house said the scheme might invest up to 35 per cent in equity and equity-related instruments other than mid-cap companies, debt and money market instruments, and up to 10 per cent in units issued by REITs and InvITs.
The minimum lumpsum subscription amount for the scheme is Rs 5,000 during the NFO period. It will allow SIP (systematic investment plan), STP (systematic transfer plan), and SWP (systematic withdrawal plan) modes of investments after the NFO period.
It will track the S&P BSE 150 Mid Cap Index TRI for performance.
The fund house noted that 75 per cent of mid-cap businesses depend on domestic factors, "offering better risk-adjusted returns from under-researched companies in the emerging themes and sectors."
The average compound annual growth rate (CAGR) of leaders in the mid-cap space has been far superior in a one-to-seven-year period compared to the S&P BSE Mid Cap 150 Index.
By citing its data, Canara Robeco said that the average one-year CAGR of mid-cap leaders as of Sep 30, 2022, the most volatile period, was 10 per cent, against the index's one per cent.
Likewise, the five-year average CAGR stood at 22 percent compared to 13 percent of the index, and the seven-year CAGR stood at 23 per cent versus 15 per cent for the index.
The fund house said the S&P BSE 150 Mid Cap and Nifty 150 Mid Cap TRI indices have rarely dipped into negative territory in three and five-year rolling CAGRs