Mirae Asset Tax Saver Fund: Seizing Long Term Growth Opportunities

Mirae Asset Tax Saver Fund is one such ELSS that has built an exceptional track record and figures among top quartile performers across various time periods.

Past performance is not an indicator of future returns
Data as on April 27, 2022
(Source: ACE MF)

Mirae Asset Tax Saver Fund has been relatively successful during both upside as well as downside markets. The fund has stood strong against its peers and has managed to outperform its category average as well as the benchmark by a noticeable margin across most time periods. Over the long-term horizon of 3 years and 5 years, Mirae Asset Tax Saver Fund has generated respective returns at 21.3% and 18.3% CAGR, which is among the highest in the category and clearly stands far ahead of the benchmark. Even the short-term performance of the fund is reasonable.

More importantly, the fund has achieved this feat at a reasonable risk, thus rewarding its investors with superior risk-adjusted returns as well. The volatility registered by the fund is nearly in line with the benchmark, whereas its Sharpe Ratio (0.23), reflecting the fund's ability to deliver better risk-adjusted returns, has been commendable.

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Investment strategy of Mirae Asset Tax Saver Fund

Mirae Asset Tax Saver Fund is mandated to hold at least 80% of its assets in equity and equity-related instruments. 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 return ratios.

Following a top-down and bottom-up approach of 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 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.

Mirae Asset Tax Saver Fund aims to identify long-term investment opportunities in stocks of high-quality businesses available at reasonable prices and follow a buy-and-hold investment strategy until its full potential is derived. The fund had a moderate portfolio turnover of around 70-90% in the last one year.

The fund usually holds predominant exposure to large caps (65-75% of its assets) along with substantial allocation in mid and small-caps (20-30% of its assets).

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 March 31, 2022, the fund held as many as 67 stocks in the portfolio. The top 10 stock holdings in the portfolio accounted for nearly 45.2% of the total assets. Large-cap names such as Infosys, HDFC Bank, ICICI Bank, Reliance Industries, and Axis Bank, among others, 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.

In the last one year, Mirae Asset Tax Saver Fund has benefited from its holdings in Infosys, ICICI Bank, Bharti Airtel, Tata Steel, and SBI, that have turned out to be major contributors to its returns. It also benefitted from its holdings in Indian Energy Exchange, TCS, UTI Asset Management Co., Prince Pipes and Fittings, Sun Pharma, Reliance Industries, etc.

In terms of sector, Banking and Finance stocks together form a major 34% of its portfolio. The fund also held substantial exposure in Infotech, Petroleum, Consumption, Pharma, Engineering, Auto, and Consumer Durable with an allocation in the range of 3% to 14% of its assets. The top 5 sectors together occupied about 62% of Mirae Asset Tax Saver Fund's portfolio. Although its portfolio is skewed towards cyclicals, it is fairly diversified to defensives as well.

Suitability

The superior stock-picking strategy has helped Mirae Asset Tax Saver Fund to identify the right stocks and outscore the market across time periods. It has been agile enough to take advantage of various investment opportunities present across segments and has a very positive outlook.

The 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 low and perform well even in uncertain market conditions. With an experienced fund manager at the helm, Mr Neelesh Surana, whose stock convictions have played out well in the past, the fund has the ability to do well in the future as well.

Mirae Asset Tax Saver Fund is suitable for investors looking for a growth-oriented fund in the ELSS space with a long-term view.

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.

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. Suresh Lulla;

13. I V Subramaniam;

14. Murali Ananthan Krishnan.

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 Tax Saver 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