The equity market has rebounded in the past one and a half months and is nearing its previous highs. However, due to the uncertain nature of the economic environment, some pullback may be imminent. Thus, it is advisable to have exposure across market caps so you can benefit from the diversification. Large and Mid-Cap Funds are a separate set of multi-cap strategy that offers investors an opportunity to diversify their investment across stocks of large and mid-sized companies.
Large-cap stocks are known to provide steady returns, while mid-cap stocks have the potential to generate high returns. A combination of these stocks in the portfolio can help you to earn optimal risk-adjusted returns.
Mirae Asset Emerging Bluechip Fund is the most popular scheme in the Large & Midcap Fund category that has recorded superior long-term growth without taking unnecessary risks.
Graph 1: Growth of Rs 10,000 if invested in Mirae Asset Emerging Bluechip Fund 5 years ago
Past performance is not an indicator of future returns
Data as on August 09, 2022
(Source: ACE MF)
Mirae Asset Emerging Bluechip Fund is the largest and most popular scheme in the Large & Midcap fund category. The fund looks to combine the stability of large-caps along with the growth of select emerging mid-sized companies which have the potential to become the future bluechips. Mirae Asset Emerging Bluechip Fund is known for its prudent investment approach that has helped it deliver superior risk-adjusted returns to its investors. Since its inception in July 2010, Mirae Asset Emerging Bluechip Fund has not only managed to deliver robust returns in the bull phases but also considerably restricted losses in the bear phases. The fund’s commendable performance has helped it gain popularity among investors, resulting in a massive growth in AUM. Notably, in order to put a check on capacity, the fund house has suspended lump sum investments in the scheme since October 2016 (when its corpus was around Rs 3,000 crore) and has currently restricted fresh registrations via SIP to Rs 2,500 per month. Over the last 5-year period, Mirae Asset Emerging Bluechip Fund outperformed the benchmark by nearly 3 percentage points in compounded returns. An investment of Rs 10,000 in Mirae Asset Emerging Bluechip Fund would have now more than doubled to Rs 21,191 as compared to Rs 18,929 for a simultaneous investment in its benchmark.
Table: Mirae Asset Emerging Bluechip Fund’s performance vis-á-vis category peers
|Quant Large & Mid Cap Fund
|Axis Growth Opp Fund
|Mirae Asset Emerging Bluechip Fund
|Canara Rob Emerg Equities Fund
|ICICI Pru Large & Mid Cap Fund
|Edelweiss Large & Mid Cap Fund
|HDFC Large and Mid Cap Fund
|SBI Large & Midcap Fund
|Kotak Equity Opp Fund
|Bank of India Large & Mid Cap Equity Fund
|NIFTY LargeMidcap 250 – TRI
Returns are point to point and in %, calculated using the Direct Plan-Growth option. Those depicted over 1-Yr are compounded annualised.
Data as on August 09, 2022
(Source: ACE MF)
*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.
Mirae Asset Emerging Bluechip Fund is a Large & Midcap Fund that has constantly made it to the list of top quartile performers over longer time frames. The fund has showcased its ability to generate significant alpha for its investors on multiple occasions in the past. Mirae Asset Emerging Bluechip Fund’s long-term track record is exemplary wherein it has generated compounded annualised alpha of 3 to 4 percentage points over its benchmark Nifty LargeMidcap 250 – TRI. At the same time, it has outpaced most of its peers by a distinct margin. Even though the fund has trailed the benchmark and the category average in the last 1-year, it has the potential to bounce back strongly.
Mirae Asset Emerging Bluechip Fund’s volatility (standard deviation) of 23.05% is competitive to its peers and slightly lower than the benchmark. It has more than compensated its investors in the form of superior risk-adjusted returns. The Sharpe ratio (0.23) of the fund is commendable and figures among the highest in the category.
Investment strategy of Mirae Asset Emerging Bluechip Fund
Classified under Large & Midcap Fund category, Mirae Asset Emerging Bluechip Fund is mandated to invest 35% to 65% of its assets in stocks of Mid-cap companies (which are not part of the top 100 stocks but fall within top 250 stocks by market capitalization at the time of investment). Simultaneously, the fund holds 35% to 65% of its assets in stocks of Large-cap companies (top 100 stocks by market capitalization at the time of investment).
While picking stocks for the portfolio, Mirae Asset Emerging Bluechip Fund aims to hold a well-diversified portfolio without having any bias towards any particular theme, sector or style. Following a mix of the top-down and bottom-up approach to investing, the fund management broadly analyses the macroeconomy and invests in stocks of high-growth companies likely to benefit from the macroeconomic, sectoral, and industry trends. The fund managers look for long-term investment opportunities in stocks of high-quality businesses that are available at reasonable prices and follow a buy-and-hold investment strategy until its full potential is derived. Notably, the turnover ratio of the fund has ranged between 65% to 80% in the last one year.
Graph 2: Top portfolio holdings in Mirae Asset Emerging Bluechip Fund
Holding in (%) as of June 30, 2022
(Source: ACE MF)
As of June 30, 2022, Mirae Asset Emerging Bluechip Fund held a well-diversified portfolio of around 69 stocks spread across market capitalization, with prominent large-cap names like HDFC Bank, ICICI Bank, Infosys, Axis Bank, and SBI appearing among its top holdings. Notably, 4 out of its top 5 holdings are bank stocks. The top 10 stocks in the portfolio together accounted for nearly 37% of the total assets. Some of its top stocks have been in the portfolio for well over 2 years now. The fund currently holds a long tail of around 25 stocks with an exposure of less than 1% in each stock.
In the last one year, Mirae Asset Emerging Bluechip Fund benefitted from its holdings in Bharti Airtel, ICICI Bank, SKF India, TVS Motor Company, among others, while its holdings in Natco Pharma, Gujarat State Petronet, Axis Bank, JK Cement, Tata Steel, etc. eroded some of its gains.
While Mirae Asset Emerging Bluechip Fund’s portfolio is skewed towards cyclicals, it is fairly spread across defensive and sensitive sectors as well. Banks dominate its portfolio with an allocation of 18.5% while Finance stocks account for another 11.7% in the portfolio. The presence of Infotech, Pharmaceuticals, and Consumption, among the top sectors indicates that the fund managers have kept a balanced portfolio with a defensive outlook, given the high market volatility. Auto & Auto Ancillaries, Engineering, Petroleum, Chemicals, Consumer Durables, and Cement are among the other core sectors in the fund’s portfolio.
Mirae Asset Emerging Bluechip Fund is a process-driven fund and has been agile enough to take advantage of various investment opportunities present in the large-cap as well as mid-cap segments. It aims to invest primarily in growth-oriented stocks while simultaneously keeping an eye on valuations.
The fund adopts a well-balanced approach to investing. It does not resort to taking aggressive calls, but maintains a diversified portfolio of quality stocks that are expected to benefit from macroeconomic, industry, and sectoral trends, and holds them with a long-term view. This strategy of the fund house has enabled the fund to perform consistently across market cycles, while keeping the overall risk at reasonable levels.
The aggressive investment mandate along with higher allocation to mid and small-caps makes Mirae Asset Emerging Bluechip Fund suitable for investors having a higher risk appetite and looking to gradually invest (via SIP) with a long-term view of at least 5 to 7 years.
This article first appeared on PersonalFN here