Large Cap Funds invest in stocks of large-sized companies that are usually market leaders. Since Large Cap Funds invest in well-established businesses, they are less risky compared to Mid Cap Funds and Small Cap Funds.
Over the long run, Large Cap Funds can offer steady growth of capital at moderate risk. Thus, if you want to benefit from the growth potential of equities but do not have the appetite to handle very high risk, Large Cap Funds can be your best bet.
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.
Graph 1: Growth of Rs 10,000 if invested in Mirae Asset Large Cap Fund 5 years ago
Past performance is not an indicator of future returns
Data as on December 20, 2022
(Source: ACE MF)
Mirae Asset Large Cap Fund is a large cap-biased fund that focuses on generating long-term capital appreciation through a diversified portfolio of stocks of large-sized companies spread across sectors. It aims to participate in high-quality businesses available at a reasonable price. The fund holds a spectacular long-term performance track record that speaks for its success. Launched in April 2008, Mirae Asset Large Cap Fund has come a long way, rewarding investors, despite going through multiple changes in its investment mandate. Notably, the changes in its mandate did not impact the core investment style of the fund as it still aims to benefit from the sector and stock-specific opportunities, while the portfolio continues to be biased towards large caps. The prudent investment strategies followed by the fund have earned it the tag of being a consistent performer that has rewarded long-term investors well across market cycles. Over the last 5 years, Mirae Asset Large Cap Fund has appreciated at a CAGR of around 12.3%, which is broadly in line with the 12.6% CAGR delivered by the current benchmark Nifty 100 – TRI index. An investment of Rs 10,000 in Mirae Asset Large Cap Fund would have now appreciated to Rs 17,887.
Table: Mirae Asset Large Cap Fund’s performance vis-á-vis category peers
|Canara Rob Bluechip Equity Fund
|Nippon India Large Cap Fund
|ICICI Pru Bluechip Fund
|SBI BlueChip Fund
|Aditya Birla SL Frontline Equity Fund
|HDFC Top 100 Fund
|Mirae Asset Large Cap Fund
|Franklin India Bluechip Fund
|Axis Bluechip Fund
|NIFTY 100 – 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 December 20, 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 of future returns. The percentage returns shown are only for indicative purposes.
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.
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.
Graph 2: Top portfolio holdings in Mirae Asset Large Cap Fund
Holding in (%) as of November 30, 2022
(Source: ACE MF)
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.
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.
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.
This article first appeared on PersonalFN here