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

Mirae Asset Emerging Bluechip Fund is the most popular Large & Midcap Fund that is known for its prudent investment strategy. The fund has built a commendable long-term performance record without taking undue risks and rewarded its investors reasonably.

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

Past performance is not an indicator of future returns
Data as of October 04, 2023 

Incepted in July 2010, Mirae Asset Emerging Bluechip Fund was initially categorised under the Mid Cap Fund category. It was later recategorised as a Large & Midcap Fund in 2018 to comply with SEBI’s norms. Even under its previous mandate, the fund used to hold substantial allocation in both the mid-cap and large-cap segment. Thus, the change in its mandate did not have a significant impact on its portfolio.

With an AUM of Rs 28,439 crore, Mirae Asset Emerging Bluechip Fund is the largest and most popular scheme in the Large & Midcap fund category. The fund managers look for high growth-oriented stocks across large-cap and mid-cap segments which are available at fair and attractive valuations. Mirae Asset Emerging Bluechip Fund is known for its prudent investment approach that has helped it deliver reasonable risk-adjusted returns to its investors. The fund’s commendable long-term performance has helped it gain popularity among investors, resulting in a massive growth in AUM.

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 appreciated to Rs 25,493 as compared to Rs 22,668 for a simultaneous investment in its benchmark.

How has Mirae Asset Emerging Bluechip Fund performed in the past?

Scheme Name Corpus (Cr.) 1 Year 2 Year 3 Year 5 Year 7 Year Std Dev Sharpe
HDFC Large and Mid Cap Fund 11,198 25.52 14.59 32.05 18.68 15.13 16.20 0.44
ICICI Pru Large & Mid Cap Fund 9,365 20.63 13.04 31.51 17.92 15.00 15.45 0.45
SBI Large & Midcap Fund 14,682 16.04 12.82 28.45 18.11 14.80 14.83 0.43
Kotak Equity Opp Fund 15,013 21.58 12.62 25.79 19.18 15.56 13.85 0.41
DSP Equity Opportunities Fund 8,869 20.37 8.35 25.33 17.08 14.20 14.80 0.38
Mirae Asset Emerging Bluechip Fund 28,439 19.53 7.49 25.24 20.33 17.41 14.71 0.38
Axis Growth Opp Fund 9,686 19.98 7.68 25.02 16.69 0.33
Sundaram Large and Mid Cap Fund 5,477 14.73 7.36 24.23 16.59 14.48 15.09 0.38
Canara Rob Emerg Equities Fund 17,939 12.69 6.18 22.78 17.42 15.31 14.69 0.35
Aditya Birla SL Equity Advantage Fund 5,244 14.99 0.99 19.83 13.68 10.71 17.12 0.26
NIFTY LargeMidcap 250 – TRI 19.45 9.99 26.52 17.55 15.10 15.59 0.38

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 of October 04, 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.

With a track record of over 13 years, Mirae Asset Emerging Bluechip Fund has registered a commendable track record since its inception and has been successful in delivering superior returns over the long run. Mirae Asset Emerging Bluechip Fund has not only managed to deliver massive returns in the bull periods but also considerably restricted losses in the bear periods.

Mirae Asset Emerging Bluechip Fund’s long-term track record is exemplary wherein it has generated compounded annualised alpha of 3 to 5 percentage points over its benchmark Nifty LargeMidcap 250 – TRI. At the same time, it has outpaced most of its peers by a distinct margin and found a place among the top quartile performers. Even though the fund has trailed the benchmark and some of its prominent peers in the last 2-year and 3-year period, it has the potential to bounce back with strong gains.

Mirae Asset Emerging Bluechip Fund’s volatility (standard deviation) of 14.71% is slightly lower than the benchmark and the category average. The fund has generated reasonable risk-adjusted returns; its Sharpe ratio is competitive to the category average and the benchmark.

[Read: Best Large & Mid Cap Mutual Funds to Invest in 2023 – Top Performing Large & Mid Cap Mutual Funds in India]

What is the investment strategy of Mirae Asset Emerging Bluechip Fund?

Classified under Large & Midcap Fund category, Mirae Asset Emerging Bluechip Fund is mandated to hold 35% to 65% of its assets in stocks of large-cap companies (top 100 stocks by market capitalization at the time of investment). Simultaneously, it invests 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). It aims to offer investors the opportunity to participate in the growth of emerging companies which have the potential to be tomorrow’s bluechip companies. Currently, around 50% of its assets are allocated in large-caps, around 35% in mid-caps, and 10% in small-caps.

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. The fund follows a mix of the ‘top-down’ and ‘bottom-up’ investment approach. The bottom-up approach is driven by value investing in growth-oriented businesses. Meanwhile, the top-down approach involves picking stocks that are likely to benefit from macroeconomic, industry and sectoral 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 fund had a reasonable turnover ratio of 50% to 60% in the last one year.

What are the top portfolio holdings in Mirae Asset Emerging Bluechip Fund?

Graph 2Graph 2

Holding in (%) as of August 31, 2023
(Source: ACE MF) 

As of August 31, 2023, Mirae Asset Emerging Bluechip Fund held a well-diversified portfolio of around 78 stocks spread across market capitalization, with prominent large-cap names like HDFC Bank, ICICI Bank, SBI, Axis Bank, and Reliance Industries 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 32.1% 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 36 stocks with an exposure of less than 1% in each stock.

Mirae Asset Emerging Bluechip Fund has benefitted from its exposure to ICICI Bank, SKF India, Power Finance Corporation, TVS Motor Company, Bharat Electronics, Axis Bank, ITC, SBI, and Bharti Airtel that turned out to be the major gainers in the portfolio over the last 2 years. It also benefitted from Maruti Suzuki India, Tata Motors, L&T, CEAT, Sun Pharma, and Krishna Institute of Medical Sciences were among others that contributed to its gains. On the other hand, its holdings in Infosys, Gujarat State Petronet, Crompton Greaves Consumer Electricals, and Ipca Laboratories were among stocks that 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 the fund’s portfolio with an allocation of 21.7% while Finance stocks account for another 9.2% in the portfolio. Engineering, Infotech, Pharma, Consumption, Auto, Telecom, and Power are among the other core sectors in the fund’s portfolio.

Is Mirae Asset Emerging Bluechip Fund suitable for my investment goals and risk tolerance?

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.

Mirae Asset Emerging Bluechip Fund adopts well-balanced approach to investing. It does not resort to taking aggressive calls, but maintains a diversified portfolio of quality stocks 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.

Mirae Asset Emerging Bluechip Fund has an experienced fund manager, Mr Neelesh Surana (CIO – Equity), who has been at the helm since the inception of the fund. He has seen the fund through various market cycles in the past and has been very successful in steering the fund through market highs and lows.

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 an investment horizon of at least 5-7 years.

Important update on Mirae Asset Emerging Bluechip Fund:

In order to put a check on capacity, Mirae Asset Emerging Bluechip Fund had suspended lump sum investments in the scheme since October 2016 (when its corpus was around Rs 3,000 crore) and had restricted fresh registrations via SIP to Rs 2,500 per month in November 2020.

However, the fund has now announced that w.e.f from October 10, 2023, fresh investments via the SIP mode will now be allowed for a maximum of Rs 25,000 per month at PAN level on aggregate basis across all available SIP dates. However, quarterly SIP investments and lumpsum investments will continue to be suspended.

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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