NFO review: Mirae Asset Midcap Fund offers a decent entry point to those who were waiting for midcap stocks to correct

The new fund offer period starts from 8th July to 22nd July 2019; ideal for investors with at least a 5 year horizon

Kumar Shankar Roy Jul 8, 2019

best performing mutual fundsMirae Asset Mutual Fund, one of India’s fastest growing AMCs, has launched its open-ended mid cap fund — Mirae Asset Midcap Fund. The NFO of the fund will be open from 8th July to 22nd July 2019. This would be the 25th option in the mid cap fund space for investors. The mid cap fund segment manages currently a total of Rs 50,000 crore in investor assets.

Like all mid cap funds, Mirae Asset Midcap Fund will be predominantly investing in a midcap portfolio (companies between 101-250 in market capitalization), while it has some flexibility to invest across large caps and small caps (up to a max of 35%) and across sectors.

As per the AMC, the midcap fund aims to build a diversified portfolio of strong growth companies, reflecting the fund-house’s most attractive investment ideas as well as to avoid concentration and liquidity risks. Read on to know more.

Why mid caps now

There are a lot of data points that will show you that at present mid cap stocks are available at a 20% valuation discount compared to large caps. Plus, mid caps, along with small caps, have been relentlessly facing sustained selling from investors. This, in effect, has made mid caps and small caps a preferred hunting ground for extremely patient investors. Small caps are quite small in size, and investing in them would involve taking greater risks. Mid caps, on the other hand, are less riskier. This is the basic premise of investing in mid caps today.

Instead of taking a direct stock approach, investing in mid caps through mutual fund portfolio is better for new-to-market investors. Yes, a mid cap stock fund will not give you a 150% return in a year like a mid cap stock, but in the same vein, a mid cap stock fund will be able to contain downsides much better. So, a mid cap fund is a great deal.

Why Mirae Asset Midcap Fund

Once you have decided that you should invest in a mid cap fund, the next job is to select the right fund.

Why should you invest in Mirae Asset Midcap Fund? There can be many reasons. One, Ankit Jain will be managing this fund. He is also the sole fund manager for Mirae Asset Great Consumer Fund, a well-performing scheme (except last one year when the category has not done well). It returned 15.48% in three years and 14.23% in five years.

Two, you believe in the stock-picking ability and investment framework of Mirae. The fund-house is known for its bottom-up approach driven by value investing in growth-oriented business.

Three, you have other equity funds in your portfolio and you want to diversify the portfolio with a midcap fund.

Four, Mirae Asset Mutual Fund has completed more than 10 years in India and has so far not had a poor near-term record. Be it the recently launched Mirae Asset Healthcare Fund (which ranks 2 out of 5 in 1-year term), Mirae Asset Great Consumer Fund (2nd of 9 in 3-year period), Mirae Asset Emerging Bluechip Fund (ranked 1st in category in 3-year period) or Mirae Asset Tax Saver Fund (ranked 1st in category in 3-year period), Mirae equity funds are doing well now.

Fund details

Plans and options – Regular and direct plans, with growth and dividend plans.

Benchmark – Nifty Midcap 100 Index TRI

Minimum investment – Rs 5,000

Exit load – If redeemed with 1 year, 1% exit load.

SIP – Monthly and quarterly with minimum 5 transfers each.

Fund house speak

Swarup Mohanty, CEO, Mirae Asset MF said, “Mirae Asset MF is enhancing its product basket to provide varied investment solutions for its investors and partners. We believe that mid cap segment provides a decent entry point for investors, as mid cap stocks are now trading at close to 20% discount to large caps. We believe investors with a 3-5 year view should be looking at diversifying its portfolio in a midcap fund.”

RupeeIQ take – As stated by the CEO, Mirae Asset is launching the fund at a time when it feels the timing is right and also it widens product basket with a mid cap fund. Small cap and mid cap funds have been beaten down in the last one year, but losses are not in double-digits yet. The worst performing mid cap fund in last 12 months has lost 7-8% of NAV value.

If you feel that the mid cap stocks are somewhere close to their bottom, it may be a good idea to start accumulation through the SIP route. Given Mirae Asset equity funds’ track-record, the mid cap fund seems a good bet. If you want to play safe, go for the trusted Mirae Asset Emerging Bluechip Fund (a large and mid cap fund).

Disclaimer: The article is only for informational purposes. Investors are requested to consult their financial, tax and other advisors before taking any investment decision.

Kumar Shankar Roy

Kumar Shankar Roy is contributing editor with RupeeIQ. Kumar is a financial journalist, with a functional experience of 15 years. He tracks mutual funds, insurance, pension, PMS, fixed income/debt and alternative investments markets closely. He has worked for The Times of India, The Hindu Business Line, Deccan Chronicle Group, DNA, and Value Research, among others, across different cities in India. He is deeply interested in marrying data insights with actionable opinion. He can be contacted at [email protected].

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