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Principal Emerging Bluechip Fund

Principal Emerging Bluechip Fund is an open-ended equity fund which is handled by a venture known as Principal Mutual Fund AMC. This is a joint venture set up by Punjab National Bank and the Principal Financial Group. The partnership in two organizations brings in global expertise associated to the Principal Financial Group, which is a leading global financial company, and Indian market’s local expertise associated with Punjab National Bank, which is a public sector bank operating in India.

Overview of the Principal Emerging Bluechip Fund

The word Bluechip, used in Principal Emerging Bluechip Fund, refers to the large-cap organizations, which are thought of as the safe investment options for the equity investors. These bluechip organizations cover a substantial market area in their respective sectors, which also means that large-cap companies have a high possibility of profitability and proper cash flow. Thus, large-cap organizations are said to survive even the most crucial, challenging conditions that arrive in the equity market.

Although bluechip companies may offer great safety to the equity investor, this investment comes at a price, which is low returns achieved in the long-term.

Contrary to this, emerging bluechip organizations are firms that are small-cap or mid-cap, but they have a high potential of thriving in an equity market in the near future. While emerging bluechip companies may be currently operating with small capitalization or high discount, they have high prospective future growth. Hence, the Principal Emerging Bluechip Fund invests and focuses on smaller organizations that are expected to become high-growth fund companies in future. This means that Emerging Bluechip Funds invest in high-risk companies with high-growth potential, which would be achieved in the long-term.

This is the reason why Principal Emerging Bluechip Fund is often referred to as an opportunity fund because it keeps the door to success open through data-driven evaluation and identification of emerging bluechip organizations.

Investment Objective of Principal Emerging Bluechip Fund

The primary objective of the Scheme is to achieve long-term capital appreciation by investing in equity and equity related instruments of large cap and mid cap companies.

To achieve the above objectives, a Principal Emerging Bluechip Fund often invests approximately 60-90% of the capital in mid-cap companies, both in equity derivatives and equities. The remaining amount, not exceeding 15%, is invested in small-cap companies, both in equity derivatives and equities.

Additionally, if the situation of the market doesn’t seem favorable, the Principal Emerging Bluechip Fund would also invest a small number of funds in the large-cap companies, both in equity derivatives and equities. For a reliable portfolio, some amount may also be kept in the money market or debt market schemes.

The Principal Emerging Bluechip Fund invests in the mid-cap organizations that fall under the market capitalization range of Nifty 100 Midcap Index companies. For the small-cap organizations, the market capitalization is kept below the range of the smallest organization which is featured on the Smallcap index. In fact, Nifty 100 Midcap Index is also a benchmark set for the Principal Emerging Bluechip Fund.

However, it is interesting to note that although Principal Emerging Bluechip Fund invests in the mid-cap organizations which fall in the range of Nifty 100 Midcap index, it has the liberty to invest in organizations that don’t come understand bracket of this index. For instance, it is possible to invest in IPOs that fulfil the investment objective of the Emerging Bluechip Fund.

Originally, the Principal Emerging Bluechip Fund invested in featured stocks with superior and sustainable management that also offered a strong foundation of financials and smart future growth potential. As a result, this fund was earlier classified as the growth and opportunity oriented equity mutual fund by many experts.

However, recently, due to trend shifts in the equity market, the Principal Emerging Bluechip Fund has started investing a large portion of its funds in mid-cap and large-cap organizations, where small-cap organizations are present in a very small amount in the fund’s portfolio. Thus, now, the performance of the fund has considerably increased from before, and it has also been outperforming its benchmark for many years.

Statistics of Principal Emerging Bluechip Fund

Launch

The scheme was originally launched on 12th November in 2008. Since then, many variants have been released.

Entry Load

There is no entry load on this open-ended mid-cap equity fund and its available variants. This change was made once SEBI released a directive to remove the entry load on Principal Emerging Bluechip Fund.

Exit Load

The exit load of Principal Emerging Bluechip Fund depends on the time and amount of redemption made against the fund. If the investor withdraws investments from the fund before the completion of 365 days, they are charged 1% of the redemption. This time is calculated from the original date of fund purchase or allotment.

Risk Level

The Principal Emerging Bluechip Fund has some level of risk which may be more for investors looking for short-term gains. For investors looking to gain from capital in more than three years, Principal Emerging Bluechip Fund may be a suitable scheme.

Redemption

The investor can redeem the money from the fund according to convenience. However, the minimum redemption allowed is Rs. 500, which is equivalent to 50 units. This amount will be credited to account or dispatched in following ten working days as per SEBI guidelines.

Minimum Investment Amount

If a new investor is investing money in Principal Emerging Bluechip Fund or its variants, it is necessary to invest at least a minimum amount of Rs. 5,000. If this investment is made as SIP, the limit of the minimum transaction for one SIP should amount to more than or equal to Rs. 500. For SIP, the minimum acceptable tenure is 12 instalments.

If an existing customer or investor is investing more money, the minimum acceptable lump sum amount should be at least Rs. 1,000.

Fund Manager

After three years of Principal Emerging Bluechip Fund’s inception, Mr. Dhimant Shah was given the handling and management of Principal Emerging Bluechip Fund Growth Plan and its variants. Mr. Shah currently has more than 20 years of experience. He has worked with industry giants like HDFC Mutual Fund AMC, ASK Raymond James Securities Pvt. Ltd., Reliance Mutual Fund AMC, etc.

Principal Emerging Bluechip Fund Performance

DurationNifty 50 TRI PTP ReturnsNifty 50 TRI ReturnsNifty Large Midcap 250 TRI PTP Returns/th> Nifty Large Midcap 250 TRI Nifty Large Midcap 250 TRIPrincipal Emerging PTP ReturnsPrincipal Emerging Returns
1 Year’s Performance9915.11-0.859234.43-7.668886.37-11.14
3 Years’ Performance133178.9910.1712734.718.3812710.968.31
5 Years’ Performance 15324.378.9116418.5010.4219848.1914.69
Performance Since Inception20310.8011.3722115.8912.8229801.2914.69

The performance of the Principal Emerging Bluechip Fund has only improved over the years. If you observe the performance of the fund in the past 5 and 3 years, respectively, the Principal Emerging Bluechip Fund has given 30% and 15% returns. Contrary to this, Nifty Large Midcap 250 TRI, which is the benchmark of Principal Emerging Bluechip Fund, has only given 23% and 14% returns.

Top Holdings of Principal Emerging Bluechip Fund

SectorsOrganisations
AutomotiveTata Motors, Eicher Motors, Gabriel India, Amara Raja Batteries, MRF, Motherson Sumi, etc.
Finance and BankingCity Union Bank, IndusInd Bank, HDFC Bank, RBL Bank, ICICI Bank, State Bank of India, Kotak Mahindra Bank, Yes Bank, Canara Bank, ICICI Prudential Life Insurance Company, Delta Corp, Muthoot Finance, Bajaj Finance, Central Depository Services Ltd., Bharat Financial Inclusion, Dewan Housing Finance Corporation, etc.
PharmaceuticalsHimadri Special, Finolex Industries, Navin Flourine, Atul, Tata Chemicals, GSFC, UPL, Aurobindo Pharma, Torrent Pharma, Natco Pharma, etc.
ConstructionIndia Cements, Dalmia Bharat, Kajaria Ceramic, Ramco Cements, Asian Granito, Shree Cements, PSP Projects, Hindustan Construction Company, etc.
EngineeringKEC International, Schaeffler India, Sadbhav Engineering, AIA Engineering, NBCC (India), BEML, etc.
ManufacturingVardhman Textiles, Ramkrishna Forgings, Ganesha Ecosphere, Bharat Electronics, SRF, S P Apparels, Mold-Tek Packaging, etc.
Gas and OilGujarat State Petronet, IOC, Petronet LNG, Indraprastha Gas, HPCL, etc.
Mutual FundsPrincipal Cash Management Fund (Growth), Principal Short Term Income Fund (Direct Growth), etc.
OthersSun TV Network, AB Nuvo, BEML Ltd. Orient Paper, Tata Communications, Voltas, Symphony, Finolex Cables, Bajaj Electricals, SpiceJet, Bata India, HUDCO, Britannia, Sheetla Foam, Triveni Engineering and Industries, Gateway Distriparks, Cyient, Hind Zinc, Infosys, Hindalco, PVR, etc.

Why Invest in Principal Emerging Bluechip Fund?

Consistency

The Principal Emerging Bluechip Fund has consistently maintained its performance position in the top quartile for the three out of four previous years. The fund has consistently stayed in the top two quartile position for the past four years. Undoubtedly, it is one of the most stable funds in the large-cap and mid-cap category.

Diversified Composition

Currently, the Principal Emerging Bluechip Fund is more inclined towards mid-cap equity. The investment style utilized in Principal Emerging Bluechip Fund is GARP (Growth at a Reasonable Price).

For the past three years, the Principal Emerging Bluechip Fund kept an average of 96.16% fund allocation in equities. The large-cap allocation has varied from 33.69% to 50.35%.

During this period, the fund was exposed to 167 stocks, and the equity ratio remained at an average of 71 stocks. From the point of view of diversity in the concentration of companies, the fund invests in financial, banking, engineering, automobiles, energy, and FMCG services. The major five sectors were:

  • Banking sector with an allocation of approximately 12.18%.
  • Industrial sector with an allocation of approximately 8.41%.
  • Auto ancillaries sector with an allocation of approximately 7.3%.
  • Pharmaceutical sector with an allocation of approximately 7.28 %.
  • Cement industry with an allocation of approximately 5.65%.

Better Benchmark Performance

The benchmark of Principal Emerging Bluechip Fund is Nifty Large Midcap 250 TRI. The fund has consistently outperformed Nifty Large Midcap 250 TRI benchmark for the previous 5 years. Hence, its performance has only increased in previous years, which increases the scope of returns offered by this fund when compared to other funds or its benchmark funds.

SIP Returns

Owing to the excellent consistency maintained by the fund in the previous 5 years, the SIP returns and lump-sum returns of the Principal Emerging Bluechip Funds has been increasing ever since.

If an investor has invested a lump sum of Rs. 1 Lakh in the Principal Emerging Bluechip Fund 5 years back, their money would have increased to around Rs. 4 Lakhs. The CAGR achieved by this fund in the previous 5 years is 32%, which is excellent when compared to other similar funds.

Similarly, investors who would have regularly invested in the SIP of Principal Emerging Bluechip Fund for the past 5 years would have received excellent returns. If an investor has invested Rs. 3 Lakhs as the cumulative amount in the SIP, their return would have been at least Rs. 5.3 Lakhs today. Undoubtedly, the XIRR of the monthly SIP is 22.24% for the past 5 years.

Further, it is interesting to note that SIP or systematic investments yield higher returns as they have the ability to regulate investment returns during bear and bull markets.

Documents Required for Principal Emerging Bluechip Fund

  1. Dully filled application form with A self-attested copy of PAN card.

  2. You can provide a PAN card, Aadhaar card, Voter’s ID, Passport, and Driving License for identity proof.

  3. You can provide Aadhaar card, Voter’s ID, Passport, Driving License, Ration Card, Insurance Copy, Bank Account Statement, utility bills, or proof of address of spouse for proof of address.

  4. KYC acknowledgement letter, if the investment is MICRO investment.

  5. SIP NACH or auto-debit form.

  6. Proof of relationship between minor and guardian, if the units are purchased in the name of a minor. For example, mark sheet of CBSE, ICSE board, or birth certificate.

  7. Third-party declaration form, if the payment account is different from the account of the beneficiary.

  8. Companies or non-individual entities need to submit:

    • Certificate of registration.
    • Article and memorandum of association.
    • Address proof.
    • HUF deed.
    • Signatures of authorized professionals.
    • Resolution from the board of directors.
    • Bank statement.
    • Power of attorney.
    • Trust deeds.
    • Registration certificate of SEBI.
    • Self-certification given on letterhead of the company.

Conclusion

The Principal Emerging Bluechip Fund has high growth potential, which provides ample opportunities for investors. With proper analysis and evaluation, the fund's portfolio is prepared, which includes investment in high-cap, low-cap, and mid-cap organizations. Due to this portfolio bifurcation, the Principal Emerging Bluechip Fund offers higher market returns in the long-term along with a secure investment medium.