Investors need a long-term view for Canara Robeco Mid Cap Fund

Conservative investors, wary of high valuations and volatility, could stagger their investments.

The NFO is currently open and closes on November 25. The minimum investment amount is ₹5,000. The scheme will allocate a minimum of 65% of its portfolio to stocks of mid-cap companies ranked between 101-250 by market capitalisation on the BSE. The fund will be managed by Ajay Khandelwal and Shridatta Bhandwaldar and will be benchmarked against the S&P BSE 150 Mid Cap Index TRI.

The fund manager will build a well-diversified portfolio of 40-50 stocks that would comprise three buckets. The first will focus on high-growth companies and will identify leaders and beneficiaries of domestic growth with superior earnings profiles.

The second bucket will have companies with the potential to compound returns and exhibit features such as strong franchise durability, high cash flow generation, low capital intensity and minimal financial leverage.

The third bucket would focus on cyclical beneficiaries that show improved cash flows, increased return on capital or industry cycle revival.

Financial planners believe mid-cap schemes allow investing in emerging themes and sectors, which have the potential to deliver higher returns.

Data from Value Research show that the mid-cap fund universe delivered 23.35% and 17.75%, respectively, over the past five and 10 years, compared to large-capst hat respectively delivered 15.96% and 13.32%.

“Mid-cap funds help investors generate alpha in their equity portfolios, Given the strong track record of the existing schemes, investors looking for a mid-cap allocation can consider the fund with more than a five-year time horizon,” said Juzer Gabajiwala, director of

Securities.

Some financial planners warn that valuations are high and returns in the near term could be muted. “Conservative investors could stagger their investments in this fund using SIPs and allocate a total of 10-20% to mid-cap space, given the high volatility here,” said Harshvardhan Roongta, CFP, Roongta Securities.