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Principal Growth Fund: Consistent multi-cap fund
Thu, Jan 25, 2018
Source : Yash Jashnani, Citrus Interactive

Principal Growth Fund is an open ended equity diversified multicap fund. The objective of the fund is to achieve long-term capital appreciation through investment primarily in equities. The fund has an AUM of Rs 593 crore as on December 2017 which has increased by Rs 206 crore compared to last year December 2016.

Performance

The fund’s performance across various time horizons is very good as seen in the table given below. It has beaten its benchmark and the equity diversified category in all the time periods.

Scheme Name

YTD

6 Months

1 Year

3 Years

5 Years

Since Inception

Principal Growth Fund

48.73

18.54

48.73

17.94

21.34

17.14

S&P BSE 200

31.35

12.76

33.26

11.18

14.06

15.25

Category Average

37.78

14.65

37.78

14.64

19.25

NA

Rank

18/148

22/157

18/148

37/144

41/133

NA

Figures are in % as on 31st December 2017; Returns above 1 year in Compounded Annual Growth Rate (CAGR) terms

In terms of calendar year returns the fund has beaten the benchmark in all time periods. It has outperformed the equity diversified category in 2013, 2016 and 2017 but underperformed in 2014 and 2015 as shown in the table below.

Scheme Name

2013

2014

2015

2016

2017

Principal Growth Fund

8.31

49.36

2.76

6.41

48.73

S&P BSE 200

4.38

35.47

-1.48

3.95

33.26

Category Average

5.12

54.6

3.57

4.71

37.78

Rank

33/133

69/136

78/144

50/148

18/148

All figures in %

Risk: In terms of measures of risk such as Standard Deviation and Beta (measured over the last 3 years), the fund has taken higher risk than the category median. 

 

Standard Deviation

Beta

Principal Growth Fund

1

1.08

Category Median

0.86

0.93

Risk-Adjusted Return: In terms of Treynor Ratio (measured over the last 3 years) the fund has provided equal risk adjusted returns as compared to the category median and in terms of Sharpe ratio (measured over the last 3 years), the fund has provided lower risk -adjusted returns than the category median.

 

Treynor

Sharpe

Principal Growth Fund

0.04

0.05

Category Median

0.04

0.06

Portfolio

Sector concentration: The fund’s concentration in the top 3, 5 and 10 sectors is lower than the category median.

 

Top 3

Top 5

Top 10

Principal Growth Fund

27.83

38.76

54.77

Category Median

30.64

41.82

61

Company concentration: The fund’s concentration in the top 3, 5 and 10 companies is lower than the category median.

 

Top 3

Top 5

Top 10

Principal Growth Fund

11.84

17.55

28.66

Category Median

15.73

23.39

38.24

Sector and Company Concentration signifies that the funds maintain a fairly diversified portfolio.

Number of Equity Holdings: The fund currently holds 74 stocks in its portfolio (as on 30th November 2017), which is higher than the median stock count of the equity diversified category, which currently stands at 44. In the last 5 years the equity holding averaged 66.

Cash and Cash Equivalent:     

Its cash holding for November 2017 was 3.61%. The average cash allocation for the last five years is 3.76%. Its maximum allocation to cash over the last two years is 8.14% in April 2017 and lowest was -0.09% in April 2015.

Portfolio Characteristics:

The top 5 sectors include Bank – Private, Bank – Public, Engineering – Construction, Pharmaceuticals & Drugs and IT – Software.

 In the last 6 months the fund has bought Axis Bank, Bharti Airtel Ltd, Coal India, Glaxosmithkline Consumer Healthcare Ltd., Glaxosmithkline Consumer Healthcare Ltd., Gujarat Narmada Valley Fertilizers & Chemicals Ltd., National Aluminium Company Ltd., NTPC Ltd., Rain Industries Ltd., Raymond Ltd., Syndicate Bank, Tata Power Company Ltd. and Vijaya Bank

Stocks of Glenmark Pharmaceuticals Ltd., Hexaware Technologies, Jet Airways (India) Ltd., Jindal Steel & Power Ltd., Prestige Estate Projects Ltd., Spicejet Ltd., Union Bank Of India, Stocks of National Aluminum Company Ltd have been bought & sold.

Process

The scheme will invest its assets in a portfolio of equity and equity related instruments. The focus of the investment strategy would be to identify stocks which can provide capital appreciation in the long term. The aim will be to build a diversified portfolio across major industries and economic sectors by using fundamental analysis as its selection process.

The scheme would invest its assets, not less than 65%, in equity & equity linked instruments. The scheme would also invest upto 35% of its assets into debt Securities (which would also include securitized debt) and money market instruments.

The investment in securitized debt may be upto 35% of its net assets. The may also invest 50% of its net assets into derivatives.

Fund Manager

Mr. P. V. K. Mohan is the Head of Equity at Principal Mutual Funds. Previously, he served as the Senior Fund Manager of Equity at the firm. In his new role, he focuses on Principal Mutual Fund's investment process targeting delivery of consistent returns in equity funds and leading the team of analysts towards the goal. He has around 17 years of experience in equity research and fund management.

The other funds managed by him are Principal Growth Fund and Principal Balanced Fund.

Previously he has worked with IL&FS and IL&FS Mutual Fund, DSP Blackrock Investment Managers and ICICI Prudential Asset Management Company.

He holds a degree in B.Tech and also a PGDM.

Our View

We like Principal Growth fund because of its consistent track record, the stock picking skills of the fund manager and the well diversified nature of the portfolio. It can be considered for multi cap allocation in the portfolio.

 

 
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