Principal Emerging Bluechip Fund year end review for 2020


Principal Emerging Bluechip Fund had a very impressive 2020.

Not only has it performed well, it has outperformed most of its peers by a big margin.

The fund was launched as a mid cap fund but was converted to a large & mid cap fund after SEBI’s recategorization exercise in 2018.

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Principal Emerging Bluechip Fund


Fund Manager

Mr Ravi Gopalakrishnan


Large & Mid cap

Date of Inception

12 December 2008


S&P BSE 200 India TR INR




Principal Emerging Bluechip Fund is one of the oldest mutual fund schemes in India with an impressive track record to back its longevity with performance.


It was initially launched as a Mid cap fund but was later converted to a Large & Mid cap fund after SEBI’s new rules with regards to classification of mutual fund categories kicked in.


Additional reading: Click Here to read our complete review of Principal Emerging Bluechip Fund


Fund Overview

Keeping in line with SEBI rules regarding classification, the fund has to invest a minimum of 35% each into large cap stocks and mid cap stocks.


This strategy was of course put into place after the new rules laid down by SEBI but prior to that the fund was a Mid Cap fund investing primarily in mid cap stocks.


The Fund was launched during the latter half of 2008 amidst the financial crisis that had engulfed the global economy.


The Fund is better suited for investors with a long-term view who are ready to ride out volatility in the short term and can therefore expect the fruits of their patience in the long term.


The fund is currently managed by Ravi Gopalakrishnan who has been at the helm since October 2019.


Features of Principal Emerging Bluechip Fund

Principal Emerging Bluechip fund is a large & mid cap fund, by mandate it needs to invest a minimum of 35% each into large & mid cap stocks.

The remaining 30% is at the discretion of the fund manager.

The fund follows a bottom up approach to stock selection.

The fund has a diversified portfolio and does not take concentrated positions, which is why mid and any small cap investments do not exceed 3 to 3.5% of the portfolio.


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Key Ingredients of Principal Emerging Bluechip Fund

The fund is a large & mid cap fund but more likely to be biased towards large cap stocks at most times.

For October end 2020, the fund had the highest allocation to Consumer goods, Information Technology and Financial Services.

The portfolio is overweight on Pharma, Industrial Manufacturing and Chemicals while underweight on Metals, Oil & Gas and Power vis-à-vis the benchmark i.e. Nifty Large Midcap 250.

Compared to its peers, the fund has a less proportion of common stocks.

As on 31st October 2020, the top 10 stocks held an aggregate of 34% of the overall portfolio.


Principal Emerging Bluechip Fund portfolio

Every mutual fund scheme will have certain themes and stocks that would work for it and certain that won’t.

What worked

For the period January 1 to October 31, 2020 the fund’s allocation to sectors like Technology and Healthcare has worked out really well for it.

In the Technology space companies like Dixon Technologies, TCS and Infosys have helped the fund post stellar returns.

In the Healthcare space it is companies like Divi’s Laboratories, Dr Lal Pathlabs and Torrent Pharma that have contributed to high performance.

The Basic materials sector includes companies such as Atul Ltd and Navin Fluorine.

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What did NOT work

For the period January 1 to October 31, 2020 the fund’s allocation to sectors like Financial Services and Communication Services had a negative impact on the fund.

These sectors where the fund had invested in includes:

  1. ICICI Bank
  2. Bajaj Finserv
  3. Federal Bank


Sector Allocation

The top holdings of the fund are across the following industries:

  1. Banks
  2. Financial Services
  3. Software
  4. Pharmaceuticals
  5. Chemicals Consumer Durables

Leading private banks and high quality NBFC’s make up the Banks and Financial Services sector whereas mid cap pharmaceutical companies comprise the exposure to Pharmaceuticals in the portfolio.


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Overweight Sectors

The fund is currently overweight on

  1. Chemicals
  2. Pharmaceuticals
  3. Consumer Goods

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The fund has been overweight on this since mid 2019.

The gradual shifting of companies from China is expected to benefit Indian companies in more than one way.

Along with this Indian companies have increased their exposure globally to companies in the agriculture and pharma sector which would increase their margins too.

Navin Fluorine and Fine Organics are some of the top holdings in this space for the fund.



Pharma stocks prior to covid were going through a lull period and have only picked up pace in the second quarter of 2020.

Like chemicals space, pharma companies can too expect a gradual shift in demand from China based companies to India based.

Over the years Indian pharma companies have ramped up their manufacturing capacity.

This along with reduced pressure on pricing caps should help companies increase their margins considerably.


Consumer Goods

Consumer goods, especially Consumer discretionary goods took a major hit due to lockdown.

However subsequently, increased sales in automobiles and electronics goods are a good sign.

With new restrictions imposed on the import of fully imported electronic gadgets like Tv’s and mobiles, Indian companies have received a major boost.

Dixon Technologies and Page Industries are the top holdings in the fund for this sector.  


Underweight Sectors

The fund is presently underweight on Financials.

Banks and quality NBFC’s would only get stronger as the economy continues to open up.

Due to negative perception around this sector during the lockdown, quality stocks in this sector are still available at attractive valuations.



What to expect going ahead?

Presently Principal Emerging Bluechip Fund is positioned to take advantage of the various schemes of the Government of India like Aatmanirbhar Bharat and Make in India.

Post covid recovery of both the economy and market would be another factor to consider.

The fund expects Consumption theme to be a long term attractive bet, post the short to medium term recovery due to covid crises.

The overall portfolio has been set up in and around the themes mentioned above.


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Disclaimer : While due precaution has been undertaken in the preparation of this article, The Mutual Fund Guide or any of its authors will not be held liable for any investments based on the above article. The above article should not be considered financial advice and has been published only for your perusal. Due credit has been given in case wherever required, in case you feel any part violates any rights then do get in touch with us and we shall get it duly removed.  
Mutual Fund investments are subject to market risks. Please read the offer document carefully before investing

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