When Principal Mutual Fund launched Principal Emerging Bluechip Fund 10 years ago, nobody thought that in the ensuing years this fund would become one of the top schemes. After all, Principal MF was a small name in India. In the 10 years of this fund’s history Principal Emerging Bluechip Fund has generated 25.74% annualised return, meaning a mere Rs 10 lakh (1 million) investment is worth Rs 1 crore today.
It is also the second best-performing equity scheme in these 10 years, while it’s just a few decimal points away from Canara Robeco Emerging Equities Fund’s 25.85% return performance.
Rising from the ashes
When it was launched in October/November 2008, Principal Emerging Bluechip Fund wasn’t a hit right from the word go. In fact, the fund-house had to extend its NFO period up to October 20, 2008 from October 10, 2008. While the fund today is a large and midcap fund (post Sebi categorization), the fund in its first avatar was a mid-cap scheme. The year 2008 was when global financial crisis hit home, with the Sensex dropping over 50% in the year. It was difficult to convince most investors to bet on midcaps.
From March 2009, the markets started returning to form. Principal Emerging Bluechip Fund, in fact, had its best 12-month show between March 2009 and March 2010 when the fund gained a whopping 205%. In 2009, Principal Junior Cap scheme was merged with Principal Emerging Bluechip. Those were great times for the fund as it quickly emerged as the best scheme of 2009 and the then fund manager Rajat Jain won accolades.
In 2011, Principal PNB Long Term Equity Fund was merged with Principal Emerging Bluechip Fund. This was the same year when the scheme got its existing fund manager, Dhimant Shah who came from HSBC AMC. Markets were bad in 2011, and the fund lost 34%. In 2012, the fund smartly rebounded and gained 55% versus benchmark’s 39%. The calendar year was a flattish period. As markets started rallying in 2014, Principal Emerging Bluechip Fund became one of the best performers once again with a mind-boggling 80% return in one year, dwarfing the benchmark’s 49% gain. It then had a quiet couple of years in 2015 and 2016, before jumping nearly 50% in 2017.
2018 has a been a 2011 kind of year. The fund has corrected about 13%, but the long-term performance of the fund has ensured big gains are not affected much by a bad year for markets.
|Trailing Returns (%)||YTD||1-M||3-M||6-M||1-Y||3-Y||5-Y||7-Y||10-Y|
|Principal Emerging Bluechip Fund||-12.48||2.86||-9.12||-9.62||-7.4||14.65||24.85||21.72||25.74|
|NIFTY Large Midcap 250 TRI||-7.91||2.7||-7.52||-5.83||-2.36||13.38||18.51||15.27||18.41|
|Large & MidCap Category||-10.08||2.66||-7.2||-7.11||-5.41||10.85||17.88||15.13||16.63|
|Fund Rank within Category||17||9||19||19||16||2||3||3||2|
|Number of funds in category||21||22||22||22||21||20||18||18||18|
|As on Nov 12, 2018|
The fund USP
The nearly Rs 2,000 crore-AUM Principal Emerging Bluechip Fund is one of the most consistent mutual fund schemes in the Large and Midcap category. Rolling return data analysis shows that it almost always figures among the top 2/3 funds across different time-periods.
We also see that the fund has been able to beat its benchmark consistently across different market conditions. This shows that the fund has been able to generate alpha for investors across market cycles.
We feel that the superlative performance of the fund, especially under Dhimant Shah, shows three things. One, the fund’s strategy of preferring stocks with sustainable improvement in growth prospects. Two, the fund has benefitted from its target-price orientation, which ensures profits are regularly booked. Third, the fund’s philosophy of having a longer view for sectors and companies helped it realise their true earnings potential.
With a high number of stocks in its portfolio, the Principal Emerging Bluechip Fund has managed to balance risk with reward.
Disclaimer: The article is only for informational purposes and is not an advice. Investors are requested to consult their financial, tax and other advisors before taking any investment decision.