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Principal Emerging Bluechip Fund: Fund Review

Principal Emerging Bluechip Fund is one of the top funds in the large and mid-cap category. The fund gave an annualized return of 25.75% return since its inception in November 2008. The fund’s performance has beaten its benchmark and category average 60% and 80% of the time respectively since its inception. The fund manager Dhimant Shah carefully picks up stocks from large and mid-cap space which have attractive valuations. Investors looking for higher returns than the market can invest in this fund for long-term but they will also face higher risk as the fund has higher ups and downs.

Performance

Principal Emerging Bluechip Fund is ranked 3rd in its category. The fund managed to beat its benchmark 6 out of 10 years since its launch. With the midcap undergoing correction the fund took a hit in its performance. But when the category and benchmark delivered only a decent performance during the uptrend, the fund’s performance was extraordinary. The fund’s returns in 2017 alone were 49% while its index and category saw only a 14% and 9% return. The fund has higher ups and downs than the rest of the funds in the category.

Principal Emerging Bluechip Fund has beaten its category by 4-9 percentage points and its benchmark by 4-7 percentage points in the 3 and 5-year returns. The fund has performed better than some of its peers in the 3 and 5-year returns ranking 3rd in the category of large and mid-cap. The fund gave 25.57% annualized return since its launch in November 2008.

Fund1 Year Return (%)3 Year Return (%)5 Year Return (%)
Principal Emerging Bluechip Fund-8.79%12.25%25.09%
Mirae Asset Emerging Bluechip Fund-3.52%15.11%29.25%
Canara Robeco Emerging Equities Fund-5.57%11.22%28.73%
Sundaram large and Mid Cap Fund0.38%11.15%18.55%
Aditya BSL Equity Advantage Fund-13.73%8.47%18.99%

A SIP investment of Rs 5,000 a month in Principal Emerging Bluechip Fund started 5 years ago is worth Rs 4.51 lakhs now. A profit of Rs 1.5 lakhs in just 5 years. Even if one chose to redeem their investment then they would be liable to pay tax only on Rs 50K as gains up to Rs 1 lakh are exempt from taxes.

Fund Information

Principal Emerging Bluechip Fund is ranked third in the category of large and mid-cap funds. It chases companies with maintainable growth prospects and returns ratios over the next 2 or 3 years. It concentrates on companies with good management track record which are trading at attractive valuations. Its portfolio construction is not index driven but it is careful with its sector and stock exposure.

Principal Emerging Bluechip Fund invests 98% of its assets in equity and holds the rest in debt and cash. The fund invests majorly in large and mid-caps (around 80%) and the rest on small-caps. It invests in mid-cap stocks that fall within the range of the Nifty Midcap index.

The fund believes in diversification with 86 stocks in the portfolio. The top five holding sectors constitute 54.36% of the portfolio. These include financial services (19.11%), engineering (10.86%), services (8.68%), FMCG (8.14%), and technology (7.57%).

Recommendation

Principal Emerging Bluechip Fund is ideal for medium to long-term goals. Investors whose risk-taking ability is high can look at investing in this fund. The fund accepts both lump sum and SIP investments. This fund has higher ups and downs (volatility) than other equity funds. Invest in this fund for an investment horizon of at least 3 years to give the best results. Do not look at the returns for this fund in short-term. The short-term returns can be manipulative.

Fund NamePrincipal Emerging Bluechip Fund
Launch DateNovember 12th, 2008
AUMRs 1,837Cr,
Return (Returns greater than 1 year are annualized)Since Launch: 25.75%
1 Year: -8.79%
3 Year: 12.25%
5 Year: 25.09%
Expense Ratio2.3%
Fund Category RiskHigh
Investment PlanGrowth
Minimum Investment Horizon5+ years
Minimum InvestmentRs 5,000
Minimum Additional InvestmentRs 1,000
Exit Load1% if withdrawn within 1 year
Fund ManagerDhimant Shah

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