Mirae Asset Emerging Bluechip Fund: Rewarding through Diversification

Apr 23, 2020

The equity market has started showing upward trend since the beginning of April. However, I am of the view that there could be more volatility in store ahead. The credit crisk in India has heightened, business operations are at risk, demand is slowing and there is a possibility of sharp contraction in GDP. All of these could show its impact on the equities in the coming months.

Hence, it becomes necessary to stick to funds that offer diversification across market capitalisation and sectors so that it can perform well across market phases and cycles.

Mirae Asset Emerging Bluechip Fund (MAEBF) is one such fund in the large & mid cap fund category that holds a well-diversified portfolio of stocks and sectors and have rewarded investors in the past with superior risk-adjusted returns.

Graph 1: Growth of Rs 10,000 if invested in Mirae Asset Emerging Equities Fund 5 years ago

MAEBF is known for its cautious investment approach that has helped deliver superior risk-adjusted returns to its investors. If you had invested Rs 10,000 in MAEBF five years ago on April 20, 2015, it would have grown to Rs 16,717 now (as calculated on April 20, 2020). In comparison a simultaneous investment of Rs 10,000 in its benchmark Nifty LargeMidcap 250 – TRI would now be worth Rs 12,143. Over the last five years MAEBF has grown at a CAGR of 10.8% which is close to 7 percentage point CAGR higher than the benchmark. The fund’s strategy to look for high growth stocks across large and mid cap space available at fair and attractive valuations helped it generate significant lead over the benchmark.


Graph 1
Data as on April 20, 2020
(Source: ACE MF, PersonalFN Research)

Table: Mirae Asset Emerging Equities Fund's performance vis-a-vis category peers

Scheme Name 1-year (%) 3-year (%) 5-year (%) Std Dev Sharpe
Invesco India Growth Opp Fund -14.76 3.98 6.21 18.78 -0.02
Mirae Asset Emerging Bluechip -11.72 3.21 10.81 20.04 -0.02
Edelweiss Large & Mid Cap Fund -12.45 2.95 4.70 18.39 -0.03
Tata Large & Mid Cap Fund -12.50 1.10 4.80 18.51 -0.07
Kotak Equity Opp Fund -13.56 0.83 6.15 19.11 -0.06
Canara Rob Emerg Equities Fund -13.38 0.71 7.97 20.34 -0.04
LIC MF Large & Midcap Fund -13.07 0.69 6.46 19.08 -0.03
Sundaram Large and Mid Cap Fund -18.62 0.52 4.97 20.50 -0.04
BOI AXA Large & Mid Cap Equity Fund -10.98 -0.20 2.31 20.83 -0.07
DSP Equity Opportunities Fund -16.04 -0.40 5.55 19.81 -0.08
Category Average -16.84 -0.99 3.99 22.56 -0.14
Benchmark -20.59 1.48 3.96 20.32 -0.09
Returns are points to point and in %, calculated using Direct Plan - Growth option. Those depicted over 1-Yr are compounded annualised.
Data as on April 20, 2020
(Source: ACE MF, PersonalFN Research)
*Please note, this table only represents the best performing funds based solely on past returns and is NOT a recommendation. Mutual Fund investments are subject to market risks. Read all scheme related documents carefully. Past performance is not an indicator for future returns. The percentage returns shown are only for indicative purposes.

MAEBF is one of those funds that have constantly made it to the list of top quartile performers. Its outperformance and the ability to generate alpha is clearly visible across periods.

Over the long term time horizon of 5 years, MAEBF outpaced the benchmark and category average by close to 7 percentage points. Some of the other top performers in the category include Invesco India Growth Opportunities FundKotak Equity Opportunities Fund and Canara Rob Emerging Equities Fund.

MAEBF's volatility (standard deviation) is competitive to its peers and the benchmark, but it more than compensates its investors in the form of superior risk-adjusted returns. Its Sharpe ratio is commendable, and is the highest in the category.

Investment strategy of Mirae Asset Emerging Equities Fund

Categorised as large & mid cap fund, MAEBF is mandated to invest minimum 35% each in equity and equity related instruments of large and mid-sized companies. The fund usually holds around 55% of its assets in large caps and around 45% in mid and small caps. Its cash balance has been below 1% in most months.

While picking stocks for the portfolio, MAEBF aims to hold a well-diversified portfolio without having any bias towards any particular theme, sector or style. Following a mix of top down and bottom up approach to investing, the fund management broadly analyses the macro economy and invest in stocks of high-growth companies likely to benefit from macroeconomic, sectoral and industry trends. The fund manager looks for long-term investment opportunities in stocks of high quality businesses that are available at reasonable prices and follows buy and hold investment strategy until its full potential is derived.

Graph 2: Top portfolio holdings in Mirae Asset Emerging Equities Fund

Graph 2 Graph 2
Holding in (%) as on March 31, 2020
(Source: Portfolio disclosure – Mirae Asset Mutual Fund)

MAEBF holds a portfolio of around 60 stocks spread across market capitalisation. Large cap names like HDFC Bank, ICICI Bank, Reliance Industries, Axis Bank and SBI appear among its top holdings. Notably, the fund's portfolio is not skewed to a set of stocks -- the top 30 stocks have an exposure ranging between 2-7%.

Banks dominate MAEBF's portfolio with an allocation of around 25%. Finance stocks account for another 7% in the portfolio. Some of the other prominent sectors include Pharma, Consumption, Infotech, Petroleum and Consumer Durables.

Suitability

MAEBF has been able to take advantage of investment opportunities to reward investors across market phases and cycles. It maintains a well-diversified portfolio of stocks across sectors and market capitalisation while keeping risk in check. However, with a major part of its portfolio exposed to Financials, volatility cannot be ruled out. This along with substantial allocation towards mid and small caps makes it suitable for investors with high risk appetite and a long term investment horizon.

 

Warm Regards,
Divya Grover
Research Analyst

 

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Editor's note: The last few years have not been among the best for equity mutual funds. While most funds have underperformed or are struggling to match the returns of the benchmark, there are few funds that have the potential to constantly generate alpha for its investors. And we have identified five such high alpha generating funds, in our latest report 'The Alpha Funds Report 2020'. Do not miss our latest research finding. Get your access to this exclusive report, right here!

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.

Terms and condition on which its offer research report

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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. Rahul Goel;

  13. I V Subramaniam.

Disclosure with regard to ownership and material conflicts of interest
  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 some of the research analysts holding units of Mirae Asset Emerging Equities 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.

Disclosure with regard to receipt of Compensation
 
  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

General disclosure
  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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Subject Company means Mutual Fund Schemes

Quantum Information Services Private Limited CIN: U65990MH1989PTC054667 Regd. Office: 103, Regent Chambers, 1st Floor, Nariman Point, Mumbai - 400 021 Corp. Office: 16 Jolly Maker Chambers II, 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




Add Comments

  • may I know the exact perctange of portfolio holdings latest

    rcguptaras@gmail.com | Apr 23, 2020
 1