Mirae Asset Large Cap Fund: Growing through Diversification across Large-cap Stocks

Mirae Asset Large Cap Fund is a popular Large Cap Fund that figures among top quartile performers across market phases. It focuses on diversification across quality stocks to reward investors with reasonable risk-adjusted returns.

Past performance is not an indicator of future returns
Data as on December 20, 2022
(Source: ACE MF)

Mirae Asset Large Cap Fund has constantly ranked among the list of top quartile performers across various time periods in the past, irrespective of the investment mandate it followed. Even though the fund has trailed the benchmark in the short term, it stands strong compared to the category average across time frames. Over longer time periods of 5 years and 7 years it has generated reasonable returns compared to the benchmark and has outpaced the large-cap category average. Moreover, Mirae Asset Large Cap Fund outpaced the large-cap category average even when most of its large-cap peers failed to keep pace with the benchmark.

With a Standard Deviation of 22.19%, Mirae Asset Large Cap Fund's volatility has been nearly in line with the benchmark and most of its prominent peers. Moreover, the Sharpe of the fund is nearly in line with the benchmark and ahead of many of its peers. Its ability to deliver reasonable risk-adjusted returns has helped it to reward investors over the long run.

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Investment strategy of Mirae Asset Large Cap Fund

Mirae Asset Large Cap Fund is mandated to invest at least 80% of its assets in large-cap stocks (i.e. Top 100 companies by market capitalisation) and aims to combine the consistency of large caps with few conviction midcap ideas (up to 20%). It has the flexibility to invest across sectors and themes. Mirae Asset Large Cap Fund follows a combination of the top-down and bottom-up approach to stock picking and endeavours to invest in companies that have a chance of benefiting from economic growth and structural changes happening in the country. The fund has proven its ability to timely identify the sector and stock-specific opportunities. However, its major focus will remain on companies qualifying under large caps. The investment approach of the fund is centred around participating in high-quality businesses up to a reasonable price and holding the same over an extended period of time. The scheme tries to identify companies that have sustainable competitive advantages, i.e. stocks that have strong pricing power and are sector leaders.

Aiming to outperform the benchmark, the fund managers follow a rigorous investment process that leads to alpha generation. They look at businesses on various quantitative and qualitative parameters and give high importance to quality and scalable businesses run by credible management. While picking stocks for the portfolio, the fund managers look for growth businesses but then again evaluate the value before buying into them. Mirae Asset Large Cap Fund has a tendency to vary its investment strategies depending on various external factors. It resists following any market momentum and stays fully invested at most of the time.

Mirae Asset Large Cap Fund invests in a well-diversified portfolio of about 50-65 stocks. As of November 30, 2022, Mirae Asset Large Cap Fund held 59 stocks in its portfolio. Its major exposure is in highly liquid large-cap names like HDFC Bank, ICICI Bank, Infosys, Reliance Industries, and Axis Bank, which collectively account for around 39.4% of its assets. Bharti Airtel, SBI, L&T, HUL, and Maruti Suzuki India stood among the other top holdings in the fund's portfolio. Most of these names have been prominent candidates in the fund's portfolio for well over 2 years now.

In the last 2 years, Mirae Asset Large Cap Fund has made the most of the rally in large-cap stocks and has benefited from its prominent holdings in stocks like ICICI Bank, SBI, Infosys, Reliance Industries, and Bharti Airtel that have together contributed over 20% to its absolute returns. L&T, Bharat Electronics, Axis Bank, and ITC stood among other top gainers in the portfolio. On the other hand, stocks like Biocon, Dr Reddy's Laboratories, HDFC Life Insurance, and Divi's Laboratories, among others, eroded some of its gains.

In terms of sector, around 36.1% of the fund's portfolio is currently skewed towards Banking and Finance stocks, followed by Infotech, Petroleum, Consumption, and Pharma together accounting for another 33.3% of the portfolio. The remaining portion of the fund's portfolio is diversified across a range of sectors like Auto, Engineering, Telecom, Consumer Durables, Power, and Cement, among others. Mirae Asset Large Cap Fund has significant diversification to both cyclical and defensive sectors.

Suitability

Backed by stringent investment systems and processes, Mirae Asset Large Cap Fund has not only delivered superior returns during market rallies but has also performed well during depressed market conditions. Mirae Asset Large Cap Fund holds a well-diversified portfolio spread across stocks and sectors, which helps it efficiently deal with market fluctuations. This bodes well with the large-cap allocation, which further increases the stability of the portfolio and performance.

The fund is nimble in its approach and has a history of taking timely sector bets. The cyclical bets taken by the fund manager have helped increase the return generated by the fund during economic recoveries, whereas the allocation to defensives helps tackle the volatility and limit downsides.

Mirae Asset Large Cap Fund is suitable for investors seeking a well-managed and relatively stable large-cap fund for long-term wealth creation with a time horizon of at least 5 years.

Warm Regards,
Divya Grover
Research Analyst

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Note:  This write up is for information purpose and does not constitute any kind of investment advice or a recommendation to Buy / Hold / Sell a fund. Returns mentioned herein are in no way a guarantee or promise of future returns. As an investor, you need to pick the right fund to meet your financial goals. If you are not sure about your risk appetite, do consult your investment consultant/advisor. Mutual Fund Investments are subject to market risks, read all scheme related documents carefully.

DISCLOSURE AS PER SECURITIES AND EXCHANGE BOARD OF INDIA (RESEARCH ANALYSTS) REGULATIONS, 2014

About the Company including business activity

Quantum Information Services Private Limited (QIS) was incorporated on December 19, 1989.

QIS was promoted by Mr Ajit Dayal with an objective of providing value-based information/views on news related to equity markets, the economy in general, sector analysis, budget review and various personal products and investments options available to the Public. It was the first company to start equity research on an institutional level.

'PersonalFN' is a service brand of QIS and was started in the year 1999. In 1999, the Company registered the Domain name www.personalfn.com for providing information on mutual funds and personal financial planning, financial markets in general, etc. and services related to financial planning and research in various financial instruments including mutual funds, insurance and fixed income products to customers. It offers asset allocation and researched investment recommendations through its financial planning services.

Quantum Information Services Private Limited (QIS) is registered as Investment Adviser under SEBI (Investment Adviser) Regulations, 2013 and having Registration No.: INA000000680. In terms of the second proviso to Regulation 3 (1) of SEBI (Research Analysts) Regulations, 2014 the Company is not required to obtain Certificate of registration from SEBI.

Disciplinary history

There are no outstanding litigations against the Company, its subsidiaries and its Directors.

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Details of associates

1. Money Simplified Services Private Limited;

2. PersonalFN Insurance Services India Private Limited;

3. Equitymaster Agora Research Private Limited;

4. Common Sense Living Private Limited;

5. Quantum Advisors Private Limited;

6. Quantum Asset Management Company Private Limited;

7. HelpYourNGO.com India Private Limited;

8. HelpYourNGO Foundation;

9. Natural Streets for Performing Arts Foundation;

10. Primary Real Estate Advisors Private Limited;

11. HYNGO India Private Limited;

12. Suresh Lulla;

13. I V Subramaniam.

1. ‘subject company’ is a scheme on which a buy/sell/hold view or target price is given/changed in this Research Report;

2. Neither QIS, it's Associates, Research Analyst or his/her relative have any financial interest in the subject Company; except for one of the Research Analysts holding units of Mirae Asset Large Cap Fund;

3. Neither QIS, it's Associates, Research Analyst or his/her relative have actual/beneficial ownership of one per cent or more securities of the subject Company, at the end of the month immediately preceding the date of publication of the research report;

4. Neither QIS, it's Associates, Research Analyst or his/her relative has any other material conflict of interest at the time of publication of the research report except that QIS (PersonalFN) is, as per SEBI (Mutual Funds) Regulations 1996, an associate / group Company of Quantum Asset Management Company Private Limited and Trustees and Sponsor of Quantum Mutual Fund (QMF) and to that extent there may be conflict of interest while recommending any schemes of QMF. However, any such recommendation or reference made is based on the standard evaluation and selection process, which applies uniformly for all Mutual Fund Schemes. The payment of commission (upfront / annualized & trail), if any, for any Schemes by QMF to QIS (PersonalFN) is also at arm's length and as per prevailing market practices.

1. Neither QIS nor it's Associates have received any compensation from the subject Company in the past twelve months;

2. Neither QIS nor it's Associates have managed or co-managed public offering of securities for the subject Company;

3. Neither QIS nor it's Associates have received any compensation for investment banking or merchant banking or brokerage services from the subject Company;

4. Neither QIS nor it's Associates have received any compensation for products or services other than investment banking or merchant banking or brokerage services from the subject company in the past twelve months.

5. Neither QIS nor it's Associates have received any compensation or other benefits from the subject Company or third party in connection with the research report

1. The Research Analyst has not served as an officer, director or employee of the subject Company.

2. QIS or the Research Analyst has not been engaged in market making activity for the subject Company.

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Quantum Information Services Private Limited CIN: U65990MH1989PTC054667 Regd. & Corp. Office: 103, Regent Chambers, 1st Floor, Nariman Point, Mumbai - 400 021

Email:info@personalfn.com Website: www.personalfn.com Tel.: 022 61361200 Fax.: 022 61361222 SEBI-registered Investment Adviser. Registration No. INA000000680, SEBI (Investment Advisers) Regulation, 2013