Healthy returns across all time-frames

It has re-jigged its portfolio, investing a higher proportion in mid-cap stocks

Those looking to create wealth for the long-term can consider investing in Invesco India Growth Opportunities Fund, formerly known as Invesco India Growth.

The recent SEBI circular on ‘Categorization and Rationalization of Mutual Fund Schemes’, though, could alter its portfolio substantially. The multi-cap fund had a large-cap bias in its earlier avatar, investing 77-80 per cent in such stocks.

It is now a large and mid-cap fund as per SEBI’s categorisation, and will have to invest at least 35 per cent each in large- and mid-cap stocks.

Over the past few months, the fund has re-jigged its portfolio, investing a higher proportion in mid-cap stocks — since February, it has invested 27-34 per cent in mid-caps (as per Association of Mutual Funds of India classification).

The fund’s benchmark has also changed from S&P BSE 100 to S&P BSE 250 Large Midcap 65:35 Index. .

Strategy change

There will also be some proposed changes in its investment strategy as per an addendum put out by the fund house. Earlier, the fund followed a bottom-up approach, investing across market caps and sectors. As per the new mandate, the fund proposes to follow both top-down and bottom-up approach, leading to greater emphasis on economic and market cycles, as against its earlier strategy where it focussed on the prospects of individual stocks rather than industries.

But despite the possible changes in the portfolio, the fund should continue to deliver healthy returns for investors, given its good track record of stock-picking and delivering superior returns across all time-frames. If you are willing to take a higher risk that comes with the relatively higher exposure to mid-cap stocks, you can continue to invest in the fund.

Performance and strategy

Over one-, three- and five-year periods, the fund has delivered returns of 17.8, 11 and 18.7 per cent, respectively, beating the returns of the category average. In these periods, the fund was placed on the top quartile.

Interestingly, it has adopted a fully invested approach — about 95 per cent of its assets are invested, and it doesn’t take any cash call. Invesco India Growth Opportunities has about 41 stocks in its kitty, spread across 20 sectors. Banking is the top preferred sector, constituting 24 per cent of the assets.

Finance, petroleum products and software are the other preferred sectors which are attracting market interest. It is overweight on financials and consumer discretionary sectors, and underweight on consumer staples.

Over the past six months, the fund has upped its allocation in auto ancillary while drastically trimming its exposure to automobiles. Key blue-chip stocks such as HDFC Bank, RIL, IndusInd Bank, ICICI Bank and Maruti Suzuki are some of the top holdings that provide consistency to the fund’s performance.

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