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

Mirae Asset Large Cap Fund is a popular Large Cap Mutual Fund that once held a superior track record of performance across market phases but has been struggling for quite some time. It holds a diversified portfolio of quality stocks to deliver sound risk-adjusted returns.

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

Past performance is not an indicator of future returns
Data as of February 13, 2024
(Source: ACE MF, data collated by PersonalFN) 

Launched in April 2008, Mirae Asset Large Cap Fund aims to participate in high-quality businesses available at a reasonable price.

The fund holds a remarkable long-term performance track record, generating returns at a CAGR of 15.2% since its inception. Mirae Asset Large Cap Fund has come a long way since its launch, rewarding investors, despite going through multiple changes in its investment mandate. Initially launched as an opportunities-style fund, the fund always had the flexibility to invest in stocks of companies across market capitalisations and sectors depending on their attractiveness, but maintained a large-cap bias in its portfolio.

It was reclassified into a Multi Cap fund in 2018 and later converted to a Large Cap fund in May 2019. The changes in its mandate did not impact the core investment style of the fund as it still aims to benefit from sector and stock-specific opportunities, with a portfolio tilted towards large-cap stocks. The prudent investment strategies followed by the fund earned it the tag of being a consistent performer that rewarded long-term investors well across market cycles in the past.

Although Mirae Asset Large Cap Fund has witnessed a lean phase in the last couple of years, it still stands strong compared to the category average and the benchmark over the long term. Over the last 5 years, Mirae Asset Large Cap Fund has appreciated at a CAGR of around 15.9%, which is marginally lower than the 16.5% CAGR delivered by the current benchmark Nifty 100 – TRI index. An investment of Rs 10,000 in Mirae Asset Large Cap Fund five years back would have now appreciated to Rs 20,952, compared to a valuation of Rs 21,494 for a simultaneous investment in its benchmark.

How has Mirae Asset Large Cap Fund performed on a rolling return basis?

Scheme Name	Corpus (Cr.)	1 Year	2 Year	3 Year	5 Year	7 Year	Std Dev	Sharpe
Nippon India Large Cap Fund	21,454	23.17	17.85	28.06	15.13	15.96	14.54	0.35
HDFC Top 100 Fund	30,980	19.99	15.08	25.14	13.91	14.48	14.19	0.31
ICICI Pru Bluechip Fund	49,838	17.71	13.46	23.76	14.60	15.17	12.95	0.32
SBI BlueChip Fund	43,273	16.11	11.13	22.46	14.04	13.73	13.33	0.22
Aditya Birla SL Frontline Equity Fund	26,046	14.79	10.55	21.87	12.94	13.23	13.47	0.24
Franklin India Bluechip Fund	7,465	12.24	6.84	20.70	11.72	11.66	13.68	0.19
Canara Rob Bluechip Equity Fund	11,823	14.64	9.46	20.30	16.02	16.07	13.07	0.23
Mirae Asset Large Cap Fund	37,904	12.23	8.89	20.23	13.71	15.08	13.19	0.20
UTI Large Cap Fund	12,082	11.53	8.00	20.09	13.34	13.63	13.60	0.20
Axis Bluechip Fund	32,675	8.36	4.04	14.87	12.89	14.63	14.09	0.12
Nifty 100 – TRI		11.68	9.19	20.44	13.08	14.02	14.27	0.21

The securities quoted are for illustration only and are not recommendatory.
Returns are on a rolling basis and in %. Direct Plan-Growth option. Those depicted over 1-Yr are compounded annualised.
Data as of February 13, 2024
(Source: ACE MF, data collated by PersonalFN)
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 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 several of its prominent peers in the short term, it stands strong compared to the benchmark across time frames. Over longer time periods of 5 years and 7 years the fund has generated reasonable returns compared to the benchmark and the large-cap category average.

Despite subdued performance in the short term, Mirae Asset Large Cap Fund appears well equipped to bounce back with strong gains and perform consistently well over full market cycles.

With a Standard Deviation of 13.19%, Mirae Asset Large Cap Fund has registered lower volatility compared to the benchmark and the category average. Moreover, the Sharpe Ratio of the fund is nearly in line with the benchmark but lower than the prominent peers in the category. Its ability to deliver reasonable risk-adjusted returns has helped it to reward investors over the long run.

[Read:  Are Large Cap Mutual Funds Falling Out of Favour?]

[Read:  Should You Invest in Nifty Index Funds as Large Cap Mutual Funds Underperform?]

What is the 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 capitalization) and aims to combine the consistency of large caps with a few high conviction mid-cap 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 may benefit from economic growth and structural changes happening in the country.

The fund has proven its ability to timely identify sector and stock specific opportunities. 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 most of the time.

What are the top portfolio holdings in Mirae Asset Large Cap Fund?

Holding in (%) as of January 31, 2024
(Source: ACE MF, data collated by PersonalFN) 

Mirae Asset Large Cap Fund invests in a well-diversified portfolio of about 60-65 stocks. As of January 31, 2024, the fund held 62 stocks in its portfolio. Its major exposure is in highly liquid large cap names like ICICI Bank, HDFC Bank, Reliance Industries, Infosys, and Axis Bank that collectively account for around 38.2% of its assets. Bharti Airtel, SBI, Kotak Mahindra Bank, L&T, and HCL Technologies 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 multiple 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, L&T, Bharti Airtel, Axis Bank, ITC, and Sun Pharma that have together contributed over 10% to its absolute returns. Bharat Electronics, NTPC, Reliance Industries, and TVS Motor Company stood among other top gainers in the portfolio. On the other hand, stocks like Indian Energy Exchange, Infosys, Crompton Greaves Consumer Electricals, SBI Cards and Payment Services, Mphasis, and Nuvoco Vistas Corporation, among others eroded some of its gains.

In terms of sector, nearly 35% of the fund’s portfolio is currently skewed towards Banking and Finance stocks, followed by Infotech, Petroleum, and Consumption, accounting for another 27.6% of the portfolio. The remaining portion of the fund’s portfolio is diversified across a range of sectors like Engineering, Retail, Telecom, Pharma, and Auto, among others.

Is Mirae Asset Large Cap Fund suitable for my investment goals and risk tolerance?

Though Mirae Asset Large Cap Fund’s performance has been muted in the last couple of years, in the past it not only delivered superior returns during market rallies but also performed well during depressed market conditions. Backed by stringent investment systems and processes, the 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. Mirae Asset Large Cap Fund has the potential to effectively tackle market volatility and perform consistently across market cycles.

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.

Watch this video to find out the list of the best Large Cap Funds for 2024:

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