Canara Robeco Manufacturing Fund - NFO Overview

Canara Robeco AMC has come out with NFO of "Canara Robeco Manufacturing Fund", which is an open-ended sectoral / thematic equity scheme following Manufacturing sector / theme. 

 

NFO Period: February 16 - March 01 2024.

 

Why invest in Manufacturing themed equity fund now?

- The world was becoming heavily dependent on China, for all its manufacturing needs till now. The Covid-19 pandemic and resulting lockdowns all over the world, led to supply chain disruptions and resulted in Inflationary conditions globally. This forced the global companies to think of China+1 strategy, to mitigate the risk resulting from concentrated manufacturing in one geography/country.

- Volatile Geo-political situation is leading to diversification of manufacturing supply chains across globe

- India with its existing manufacturing ecosystem, availability of talented workforce will be huge beneficiary of this global phenomenon of supply chain diversification in coming years

- Focus of the Indian government on manufacturing with its "Make in India" and "Atmanirbhar Bharat" policy initiatives is also benefitting the above trend.

 

Why the fund believes India can become next Manufacturing Hub?

India with its demographics is well positioned to become an attractive investment destination for following reasons:

1) Thriving Domestic Demand

• Per capita income at an inflection point
• Rising middle class population

2) Favourable Policy Reforms

• Initiative to incentivise domestic manufacturing
• Labour reforms and ease of doing business 

3) Robust private sector

• Deleveraged corporate sector
• Globally competitive corporate tax structure

4) Alternative supply chain

• Globally competitive business
• Repositioning of global supply chains

 

Why Canara Robeco Manufacturing Fund?

- The Fund aims to invest in companies which are beneficiaries of Thriving Domestic Demand, Favourable Policy Reforms, Robust Private Sector, and Alternative Supply Chain.

- The Fund aims to capitalize on manufacturing trends and opportunities investing across relevant sectors representing the Manufacturing theme.

- Government's thrust on “Atmanirbhar Bharat”, “Make in India” and through other reforms and incentives has improved growth potential of many manufacturing-oriented sectors and companies.

 

Canara Robeco Manufacturing Fund - Fund Characteristics

·         Portfolio Allocation - Minimum 80% into Manufacturing & Allied Stocks.

·         Portfolio Concentration - Diversified Portfolio.

·         Market Capitalization Bias - Flexible across Market capitalization.

·         Investment Style - Growth biased.

·         Stock Selection - Top-Down Overlay + Bottom-up Stock Selection.

 

  Canara Robeco Manufacturing Fund - Fund Philosophy and Sectoral beneficiaries

 

How will the Fund Invest?

 

Type of Instruments	Indicative allocations (% of total assets)		Risk Profile
	Minimum	Maximum
Equity and Equity-related Instruments of companies engaged in Manufacturing theme	80%	100%	Very High
Equity and Equity-related Instruments of companies other than engaged in Manufacturing theme	0%	20%	Very High
Debt and Money Market Instruments	0%	20%	Low to Moderate
Units issued by REITs and InvITs	0%	10%	Very High

 

Who should Invest in this fund?

·         Investors that are comfortable with volatility & expecting a better risk return tradeoff

·     Investors with a high-risk appetite and long-term investment horizon of 5 years and above having a lower near-term liquidity needs

 ·     Seasoned investors who are looking to invest in a Manufacturing theme-based fund

 Risks associated with the scheme:

• Investing in a Thematic fund is based on the premise that the Fund will seek to invest in companies belonging to a group of sectors benefiting from the theme. This will limit the capability of the Fund to invest in some other sectors.

• The scheme being thematic in nature will be affected by the risks associated with Manufacturing Sectors (in this case Manufacturing Sectors are sectors involved in Manufacturing activity and as defined in Investment Objective) and hence concentration risk is expected to be high.

• Also, as with all equity investing, there is the risk that companies benefitting from the theme will not achieve its expected earnings results, or that an unexpected change in the market (due to Government Policies or Macro Economic factors) or within the company may occur, both of which may adversely affect investment results.

Thus, investing in a thematic fund could involve potentially greater volatility and risk.

[Refer to the SID of the scheme for detailed Risks]

 

Fund Managers:  Mr. Pranav Gokhale (Senior Fund Manager – Equities) & 

                              Mr. Shridatta Bhandwaldar (Head – Equities)

 

Load Structure:  Entry Load: NA; 

                            Exit Load   : 1% - if redeemed/switched out within 365 days from the date of allotment.

                                        Nil - if redeemed/switched out after 365 days from the date of allotment

 

Benchmark: S&P BSE India Manufacturing TRI

 

Disclaimer: Above article is based on data available here. Please refer to the documentation available at the site for more information regarding the scheme. The above content is for information purpose only and do not constitute any guidelines or recommendation on any course of action to be followed by the reader. Recipients of this communication should rely on information/data arising out of their own investigations. Readers are advised to seek independent professional advice, verify the contents and arrive at an informed investment decision before making any investments. Investor shall note that there is no assurance or guarantee that the investment objective of the scheme will be achieved. 

 

Mutual Fund Investments are subject to market risks, read all scheme related documents carefully.