Mirae Asset Mutual Fund, one of India’s fastest growing AMCs, has launched its first open-ended equity focused fund – Mirae Asset Focussed Fund. The new fund offer (NFO) period started on 23rd April, 2019 and will end on 7th May, 2019. RupeeIQ takes a closer look at this product. Read on to know more.
Mirae Asset Focused Fund is an open-ended equity scheme with the objective of investing in a focused portfolio of maximum 30 stocks and has the flexibility to invest across market caps like large cap, mid cap and small cap categories (i.e. multi-cap style) and across sectors. So, this will have a multi-cap fund bias as it has the flexibility to invest across focus in large cap, mid cap and small cap categories,
The fund’s investment strategy is to build a portfolio of strong growth companies, reflecting Mirae MF’s most attractive investment ideas.
Investors may recall that Mirae Asset Mutual Fund about a month back surprised everybody by proposing to change the fundamental investment strategy of their most popular and biggest fund, the Rs 10,000-crore Mirae Asset India Equity Fund. Come May 1, the multicap fund will morph into a large cap play and will be called Mirae Asset Large Cap Fund. Mirae Asset MF’s decision to change Mirae Asset India Equity Fund into Mirae Asset Large Cap Fund meant that they would soon like to fill the multi cap fund gap in their portfolio. That gap is being filled by Mirae Asset Focussed Fund.
Mirae Asset Focussed Fund will be benchmarked against the Nifty 200 Index (TRI). It will impose an exit load of 1% if redeemed within 1 year (365 days) from the date of allotment.
What is focus
The aim of any focus/focussed fund is to generate wealth by identifying and investing in high conviction stocks, maintaining optimum weight allocation and seeking tactical allocations by identifying future trends.
Historical data shows focus, when done right, can be rewarding. For instance, NIFTY 100 Index gave absolute Returns of 90.9% in last 5 years. Top performing 30 stocks of NIFTY 100 Index gave more than 2.2 times returns (>200%). So, if you focussed on just 30 and hung on, that portfolio would have produced superlative returns.
There is also some evidence that focussed funds have generated better returns and risk adjusted returns than pure large and multicap funds across periods in the long run.
How the fund aims to reduce risk
According to Mirae Asset Focussed Fund, the scheme seeks to avoid concentration risk, liquidity risk and the risk associated with equity investments. To do this, it has to enact a few risk mitigation measures. For instance, the fund will strive for adequate sector diversification, with eye on benchmark weights. It will stick to active and nimble portfolio management. Also, the cap on number of stocks, means forced displacement (only best ideas remain in the portfolio).
Gaurav Misra will be managing the scheme. He has experience of over 23 years in fund management and research. Prior to joining Mirae Asset Mutual Fund, he was associated with ASK Investment Managers Pvt. Ltd. for 13 years. He is an MBA from IIM Lucknow and BA Economics (Hons) from St. Stephen’s College, Delhi.
Misra co-manages Mirae Asset India Equity Fund along with Neelesh Surana and Harshad Borawake.
Swarup Mohanty, CEO, Mirae Asset MF said that Mirae Asset MF is enhancing its product basket to provide varied investment solutions for its investors and partners. The new offering will help the fund house increase its equity offering and enlarge its investor base.
“We believe with this offering we are providing a new investment style which will be ably managed by Mr. Gaurav Misra, who has managed such focused fund strategies in his previous stint as a portfolio manager with ASK Investment Managers Pvt. Ltd. The portfolio strategy will be centered around a maximum of 30 stocks with the flexibility to invest across market capitalisation with an aim to generate long term capital appreciation,” says Mohanty.
Fund house pedigree
Mirae Asset Mutual Fund has completed more than 10 years in India. The company’s AUM stands Rs 27,000 crore (as on 31 March 2019). According to the fund house, it has broken into the Top 15 MFs based on AAUM and is at a 12th position based on Equity Assets (Source: ACE MF, data as on 31st March 2019). The company witnessed a growth of more than 50% in 2018 calendar year.
Mirae MF says that it is witnessing a significant surge in the number of investor folios with more than 13.9 lakh investor folios (including more than 6.9 lakh SIP investors) as on 31st March 2019. The SIP flows have also grown significantly and have grown more than 10 X from Rs 29 crore in March’16 to monthly inflows of Rs 300 crore in March’19. The journey over the last 4 ½ years has been even more impressive with more than 50 times growth in AUM (AUM was Rs 500 crores on 31st July, 2013).
RupeeIQ take – Investors considering investing in Mirae Asset Focussed Fund should give at least five years time. We have over the years seen how Mirae Asset India Equity Fund has performed. So, investors would be hoping that Mirae’s new multicap equity scheme with clear ‘focus’ would replicate some of that performance. The multicap strategy of the fund is quite comforting, given that the shrinking alpha in pure-play largecap schemes.
Disclaimer: The article is only for informational purposes. Investors are requested to consult their financial, tax and other advisors before taking any investment decision.