Baroda BNP Paribas Banking and Financial Services Fund Direct Growth INF955L01971

Baroda BNP Paribas Banking& Fin Serv earns a Below Average Process Pillar rating.

The process benefits from its team of two portfolio managers, which is sufficient to execute the process. However, the rating is held back by its parent firm's subpar risk-adjusted performance, as shown by the firm's average 10-year Morningstar Rating of 2.7 stars. A lower star rating suggests that the firm has struggled to outperform on a risk-adjusted basis. The parent firm's five-year risk-adjusted success ratio of 41% also detracts from the process. The measure indicates the percentage of a firm's funds that have beat their respective category's median return for the period. The parent's relatively low success ratio suggests that the firm could do better across its fund lineup.

This strategy has tended to hold more growth stocks than others in the Sector - Financial Services Morningstar Category. But in terms of market capitalization, it is on par with peers. Looking at additional factor exposure, the managers have continually shown a willingness to take risks over the last few years, demonstrated by the portfolio's high volatility exposure. Such stocks tend to rise faster and fall harder than the broad market. High-volatility exposure contributes to stronger performance during bull markets, but often at the cost of losing more during downturns. Different from its historical appetite, however, the Volatility factor was in line with the Morningstar Category average in recent months. The strategy also had more exposure to high-momentum stocks compared with Morningstar Category peers in the most recent month. Momentum is based on the premise that market outperformers will continue to outperform, and laggards will continue to lag. This means that managers are overweighting stocks currently on a winning streak. In addition, the strategy had less exposure to high-yield stocks compared with Morningstar Category peers in recent months. Its preference for stocks with lower yields may well lead to a growthier portfolio. However, growth stocks court additional risks if their forecasts do not come to fruition and are often more volatile than companies with stable dividends. More information on a fund and its respective category's factor exposure can be found in the Factor Profile module within the Portfolio section.

The portfolio has allocations in its top two sectors, technology and consumer cyclical, that are similar to the category. The sectors with low exposure compared with category peers are financial services and healthcare; however, the allocations are similar to the category. The portfolio has 29 holdings and invests 75.2% of assets in its top 10 holdings, similar to the category average.