IDFC Premier Equity gets a Bronze

This mid-cap fund identifies companies that are niche, emerging, and different from the mainstream.
By Morningstar Analysts |  04-08-17 | 
 

IDFC Premier Equity has been through tumultuous times ever since manager Kenneth Andrade exited the fund house in September 2015. Andrade was a small/mid-cap specialist and an accomplished manager. He helmed this fund since June 2006, and it had built an impeccable track record under him. After Andrade, the fund was under Aniruddha Naha for a brief period (September 2015-March 2016), before Anoop Bhaskar took over the mantle in April 2016.

Bhaskar, like Andrade, is a seasoned manager. He has managed funds of the large-cap as well as mid/small-cap variety with reasonable success. In our opinion, he is an apt replacement for Andrade. But the investment team witnessed significant turnover after Andrade’s exit. The current team is new, and except for Bhaskar, the other members of the team lack long-term portfolio management records. Hence, we see a key-person risk in him.

This fund is run with a rather unique investment strategy, and Bhaskar prefers conserving its distinct appeal. The mandate here is to identify companies that are niche, emerging, and different from the mainstream. Bhaskar picks stocks that are at the end of a cycle, have not performed well, but can scale up during longer time frames. As a result, investments are typically made in unconventional names within the sector. The investment approach is benchmark-agnostic, in contrast with the way Bhaskar has traditionally managed funds.

Execution here under Andrade was exceptional, earning a Morningstar Analyst Rating of Silver. Under Bhaskar, the fund has just completed one year, and given the unique proposition it offers, that is too short a time frame to prudently evaluate his execution. Having said that, Bhaskar’s experience and managerial capabilities merit a Positive rating, in our opinion. But at the same time, we would like to see its execution under him in a longer time frame before gaining the same level of conviction in this strategy as we have on his other strategies.

This small- and mid-cap fund has an impressive 10-year annualised performance of 18%. Though on the 1-, 3- and 5-year paramaters, the returns are below the category average.

Our analyst has assigned the fund a Bronze rating for now.

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