Welcome to PersonalFN’s weekly analysis on diversified equity mutual funds! In this issue, we have analysed  Mirae Asset Tax Saver Fund, highlighting its performance, peer comparison, investment strategy, fundamentals, portfolio, and suitability.

Mirae Asset Tax Saver Fund is a well-managed Tax Saving Mutual Fund (ELSS) that has generated exceptional returns across market phases and figures among the top quartile performers in the category over longer periods.

[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]

What is the growth of Rs 10,000 invested in Mirae Asset Tax Saver Fund five years ago?

Graph 1

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

Launched in December 2015, Mirae Asset Tax Saver Fund is a well-managed Tax Saving Mutual Fund (ELSS) with a track record of over seven years now and has the flexibility to invest across any themes and investment styles. Mirae Asset Tax Saver Fund’s investment philosophy involves investing in growth-oriented businesses available at a decent valuation. The fund established a superior track record for itself in a short time span and caught the attention of investors to become one of the largest schemes in the Tax Saving Mutual Fund (ELSS) category. Backed by a process-driven fund house that is known for its cautious investment approach and superior risk management abilities, Mirae Asset Tax Saver Fund has delivered splendidly on the returns front. The fund has the flexibility to invest across market capitalisation, themes, and investment styles. Accordingly, it holds a diversified portfolio of strong growth companies offering growth at a reasonable price, spread across sectors. Mirae Asset Tax Saver Fund has consistently delivered strong returns since its inception, thereby generating superior risk-adjusted returns for its investors. With a CAGR of around 17.8% in the last five years, Mirae Asset Tax Saver Fund has significantly outperformed the benchmark Nifty 500 – TRI by a CAGR of over 4 percentage points. An investment of Rs 10,000 in Mirae Asset Tax Saver Fund five years ago would have now appreciated to Rs 22,721 as against a valuation of Rs 18,883 for the simultaneous investment in the benchmark. The superior fund management and cautious stock selection have driven the performance of the fund so far.

How has Mirae Asset Tax Saver Fund performed in the past?

Scheme Name Corpus (Cr.) 1 Year 2 Year 3 Year 5 Year 7 Year Std Dev Sharpe
Quant Tax Plan 4,049 20.39 14.79 41.09 25.27 22.04 20.05 0.47
Bandhan Tax Advt (ELSS) Fund 4,776 24.72 16.07 33.84 17.00 17.43 16.38 0.46
SBI Long Term Equity Fund 14,430 29.64 17.01 27.66 16.05 13.88 14.85 0.41
Nippon India Tax Saver (ELSS) Fund 12,199 20.20 14.25 27.13 11.09 10.15 15.59 0.39
HDFC TaxSaver 10,930 24.79 18.36 27.07 13.43 13.14 13.85 0.43
Parag Parikh Tax Saver Fund 1,742 22.52 15.52 26.99 11.97 0.51
Kotak Tax Saver Fund 3,855 22.86 14.44 26.65 16.54 15.90 13.89 0.41
Mirae Asset Tax Saver Fund 16,634 19.47 11.53 26.33 17.83 18.97 14.72 0.39
DSP Tax Saver Fund 11,303 20.18 11.40 26.12 16.21 15.54 14.80 0.39
Canara Rob Equity Tax Saver Fund 5,750 18.59 11.31 25.18 16.89 16.50 14.82 0.39
NIFTY 500 – TRI 19.37 12.25 24.26 13.55 14.01 15.23 0.35

The securities quoted are for illustration only and are not recommendatory.
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 July 25, 2023
(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 before investing. Past performance is not an indicator for future returns. The percentage returns shown are only for indicative purposes.

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.

What are the top portfolio holdings in Mirae Asset Tax Saver Fund?

Graph 2Graph 2

Holding in (%) as of June 30, 2023
(Source: ACE MF) 

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.

This article first appeared on PersonalFN here

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