Mutual Fund Weekly Analysis: Mirae Asset Tax Saver Fund

[Read: Tax Saving Mutual Funds: Who Should Invest, How to Invest, and the Best Ones to Invest]

[Read: 3 Best ELSS to Invest in 2023 - Top Performing Tax Saving Mutual Funds in India]

Past performance is not an indicator of future returns
July 25, 2023
(Source: ACE MF)

Mirae Asset Tax Saver Fund has proved its high-return potential by registering robust performance numbers since its inception. The fund has stood strong against its other popular Tax Saving Mutual Fund (ELSS) peers and has managed to outperform the category average as well as the benchmark by a noticeable margin across most time periods. Over the long-term horizon of 3 years, 5 years, and 7 years, Mirae Asset Tax Saver Fund has generated returns at 26.3%, 17.8%, and 19% CAGR, respectively, which is much higher than the Tax Saving Mutual Fund (ELSS) category average and clearly stands far ahead of the benchmark. Even though the fund has slightly trailed the category average and the benchmark in the last 1-year and 2-year period, its healthy long-term fundamentals offer confidence.

Mirae Asset Tax Saver Fund has also fared well in terms of risk-adjusted returns as well. The fund's volatility is competitive with the benchmark and the Tax Saving Mutual Fund (ELSS) category average. Its Sharpe Ratio (0.39), reflecting the risk-adjusted returns, have been commendable too.

What is the investment strategy of Mirae Asset Tax Saver Fund?

With an investment objective of generating long-term capital appreciation from a diversified portfolio of predominantly equity and equity-related instruments, Mirae Asset Tax Saver Fund is mandated to hold at least 80% of its assets in equities. The fund has no bias towards any particular theme or investment style and holds a well-diversified portfolio of strong growth companies available at a reasonable price. The universe of stocks for the portfolio comprises majorly of companies having robust business models, enjoying sustainable competitive advantage, and having high growth ratios.

Following a mix of top-down and bottom-up approach to investing, the fund manager broadly analyses the macroeconomy and invests in stocks of high-growth companies expected to benefit from macroeconomic, sectoral, and industry trends. While picking companies, the fund manager tests the business on various quantitative and qualitative parameters and gives importance to ROCE, growth, ROI, value, and management. He looks for growth businesses and within that, looks for value (buy at a reasonable rate). The fund manager uses the DCF (Discounted Cash Flow) mechanism to estimate the fair valuation level of stocks. The fund aims to identify long-term investment opportunities in stocks of high-quality businesses available at reasonable prices and follows a buy-and-hold investment strategy until its full potential is derived. Mirae Asset Tax Saver Fund has had a moderate portfolio turnover of around 75-90% in the last one year.

Mirae Asset Tax Saver Fund usually holds a well-diversified portfolio of stocks spread across market caps but with a large-cap bias. As of June 30, 2023, Mirae Asset Tax Saver Fund held 59 stocks in the portfolio. The top 10 stock holdings in the portfolio accounted for nearly 45.7% of the total assets and contained popular large-cap names like ICICI Bank, HDFC Bank, Reliance Industries, SBI, and Infosys, among others that appear in the list of its top holdings. Most of these stocks have been part of the fund's top holdings for over 2 years now. Notably, 4 out of the top 10 stocks belong to the Banking sector.

Mirae Asset Tax Saver Fund has benefited from its holdings in ICICI Bank, Bharti Airtel, ITC, Axis Bank, SBI, HDFC Bank, and SKF India, that have turned out to be major contributors to its returns in the last 2 years. It also benefitted from its holdings in Tata Motors, Maruti Suzuki India, L&T, Sun Pharma, Krishna Institute of Medical Sciences, Bharat Electronics, and CEAT, among others, while it booked profit in SJS Enterprises, Motherson Sumi Wiring India, Page Industries, Britannia Industries, Havells India, and Torrent Pharma, among others.

Banking and Finance stocks together form about 35% of its portfolio. The fund also holds substantial exposure in Infotech, Engineering, Petroleum, Consumption, Pharma, Power, and Retail having allocation in the range of 3% to 10% of its assets. The top 10 sectors together occupied 80.7% of Mirae Asset Tax Saver Fund's portfolio. Although the fund's portfolio is skewed towards cyclicals, it is fairly diversified into defensive and sensitive sectors.

Is Mirae Asset Tax Saver Fund suitable for my investment goals and risk tolerance?

Focusing on investment opportunities in high-quality businesses available at reasonable prices, Mirae Asset Tax Saver Fund has benefited by investing in high growth-oriented stocks but at the right valuations. The superior stock-picking strategy has helped it identify the right stocks and outpace the market across time periods. It has been agile enough to take advantage of various investment opportunities present across segments.

Mirae Asset Tax Saver Fund does not resort to taking aggressive calls for extraordinary returns but maintains a diversified portfolio of quality stocks with a long-term view. This strategy of the fund house has enabled it to keep the risk under control and perform well even in uncertain market conditions. Mr Neelesh Surana is an experienced fund manager and has been managing Mirae Asset Tax Saver Fund since its inception. His stock convictions have played out well in the past which has been rewarding for the fund and may continue to do so in the future as well.

Mirae Asset Tax Saver Fund is suitable for investors looking for a consistent performer in the Tax Saving Mutual Fund (ELSS) category with an investment horizon of at least 5 years.

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.

Disclaimer: Investment in securities market are subject to market risks, read all the related documents carefully before investing.

Disclaimer: This article is for information purposes only and is not meant to influence your investment decisions. It should not be treated as a mutual fund recommendation or advice to make an investment decision.

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About the Company including business activity

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

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