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A Quick Update on Mirae Asset India Equity Fund
April 2, 2019

This note is a quick update on the changes in the fundamental attributes of Mirae Asset India Equity Fund.


Author : iFAST Research Team



Mirae Asset India Equity Fund, one of our Recommended Multi Cap Funds in 2018-19, is being renamed as Mirae Asset Large Cap Fund and will be a part of the large cap category with effect from May 1, 2019. The new investment objective of the scheme is to generate long term capital appreciation through potential investment opportunities in equities of large cap companies. As per SEBI's new fund categorization mandate, this means that 80% of the surplus will be invested into large cap companies while the rest 20% can be invested into non-large cap companies, and this can be done without any bias towards a particular theme, sector, or style while scouting for investment opportunities.

On account of the change in the fundamental attributes of the scheme, it no longer qualifies for the multi cap category of our Recommended Funds list. Our Recommended Multi Cap Funds list for 2018-19 therefore does not include this fund anymore. Our entire Recommended Funds List now stands at 69.

Mirae Asset India Equity Fund and iFAST Recommended List of Funds

The Mirae Asset India Equity Fund made a comeback into our list in 2018-19 after exiting it in 2016. Our Detailed Report on Recommended Mutual Funds for 2018-19 had commented on it as follows:

Mirae Asset India Equity Fund (erstwhile Mirae Asset India Opportunities Fund) first entered our list in 2012, but did not make it in 2016. Even then, we expected it to be back on the list soon, and our assessment was as follows: "Our biggest exit this year has been Mirae Asset India Opportunities Fund, our best bet in the multi cap space since 2012. We are of the view that the fund is going through a short term blip and it is only a matter of time before the same bounces back into our list. We continue to maintain our confidence in the conviction of the fund management team and the investment strategy being followed while picking stocks for the portfolio. Hence, we advise our existing investors to continue with their investments into this fund via the SIP and the lump sum routes".

Our Take on the Fund After the Change in Fundamental Attributes

Our view of this change in the fund's categorization is that although the fund had the freedom to move across the market capitalization spectrum, it always had a bias towards the large cap space, which was more in line with the mandate given by SEBI for a large cap fund. Hence, the fund house may have thought it ideal to change the categorization.

One of the reasons for our liking of the fund - apart from the fact that it has been clearing our quantitative model – has been that its bias towards large cap companies protected it during volatile phases. Despite this bias, it was able to compete well with other funds in the multi cap category, wherein many funds actually scout for opportunities across the market capitalization spectrum. Our rationale for recommending this fund in our Detailed Report on Recommended Funds 2018-19 was as follows:

"We have always liked the fund on account of its higher exposure to large caps, which protect the fund during market volatility; on the other hand, its conviction on some of the good midcaps allowed it to participate in market rallies as well. The core and tactical portfolio strategies have allowed the fund manager to create long term wealth, while also capitalizing on short term opportunities".

In this scenario, as we wrote in the beginning, with an official name and category change we are forced to remove the fund from our list of Recommended Multi Cap Funds for 2018-19. For our quantitative assessment of funds this year, the Mirae Asset Large Cap Fund will be a part of the large cap category and will have to compete with funds in its new category to make an entry back into our list.

We continue to have faith in the investment strategy being followed in the fund and hence advise our investors to go ahead with the SIPs and STPs that have already been planned into this fund.

 

 

Disclaimer

ifast and/or its content and research team's licensed representatives may own or have positions in the mutual funds of any of the asset management company mentioned or referred to in the article, and may from time to time add or dispose of, or be materially interested in any such. this article is not to be construed as an offer or solicitation for the subscription, purchase or sale of any mutual fund. no investment decision should be taken without first viewing a mutual fund's scheme information document including statement of additional information. any advice herein is made on a general basis and does not take into account the specific investment objectives of the specific person or group of persons. investors should seek for professional investment, tax, and legal advice before making an investment or any other decision. past performance and any forecast is not necessarily indicative of the future or likely performance of the mutual fund. the value of mutual funds and the income from them may fall as well as rise. opinions expressed herein are subject to change without notice. please read our disclaimer on the website.


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