Mirae Asset Emerging Bluechip Fund - Rating & Review - Best Mid Cap Fund

Mirae Asset Emerging Bluechip Fund – Rating & Review – Best Mid Cap Fund

Roboadviso     Mutual Funds Rating     Posted On, Thu 15th December, 2016     No comments
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Mirae Asset Mutual Fund Emerging bluechip

Mirae Asset Emerging Bluechip Fund is an equity mid-cap fund geared to generate income and capital appreciation from a diversified portfolio that mainly invests in Indian equity related securities of companies that do not belong to the top 100 stocks by market capitalization, and have market capitalization of a minimum Rs. 100 crores at the time of investment. Let us review the fund in detail to know if it makes sense to buy, sell or hold the fund.

Basic Information and Costs

The fund came into existence in July 9, 2010. The fund is benchmarked against Nifty Free Float Midcap 100. The minimum investment required is Rs.5000, with minimum SIP amounts of Rs. 1000. On the riskometer, the fund is perceived as ‘moderately high’ risk. The fund has a turnover of 78 percent. There is an exit-load of 2 percent if one redeems the fund within 182 days, and 1 percent redemption fee if the fund is redeemed within 183 to 365 days.

Mirae Asset Emerging Bluechip Fund has an asset size of Rs. 2493 crore (as on November 30, 2016). The expense ratio for the fund is 2.36 percent (as on October 31, 2016). The fund manager is Neelesh Surana, who has been associated with the fund, since 2010.

Fund Allocation

Mirae Asset Emerging Bluechip Fund has 97.17 percent of its corpus allocated in equities with 0.8 percent in debt, and 2.1 percent in others. The sectoral allocation is such that 21.77 percent is allocated in financial, 10.77 percent  in energy,10.55 percent in services, 8.75 percent in healthcare and 8.03 percent in chemicals.

The top 10 stock holdings in its portfolio are Hindustan Petroleum (3.67 percent), Kotak Mahindra Bank Ltd (3.64 percent), ICICI Bank (3.46 percent), IndusInd Bank (3.23 percent),Federal Bank Ltd (3.05 percent), Ceat Ltd (3.00 percent), Tata Chemicals (2.64 percent), Exide Industries Ltd (2.60 percent), Tata Steel Ltd (2.52 percent) and Voltas Ltd (2.38 percent).

Performance

Since inception,  the fund has given 22.36 percent returns per annum. Over the past 1, 3 and 5 years, it has given 20.32 percent, 35.92 percent and 29.08 percent returns per annum respectively. It is a winner among its peers, though Birla Sun life Pure Value Fund, launched in May 2008,  is a befitting competitor with 17.20 percent, 34.08 percent and 24.72 percent in the past 1, 3 and 5 years.

Analysis

Mirae Asset Emerging Bluechip Fund distinguishes itself as a category topper in the past three years.  It can never be put down for being a newbie, considering it has never gone below the first quartile, ever since it was launched.

The fund has given 35.92 percent CAGR in the past three years and 29.08 percent in the past five years making it zoom past the benchmark by 12 to 14 percentage points, attaining the top position in the category. In the same period, it beat its peers by 6 to 8.8 percentage points.  Mirae has proved to be formidable in the bull as well as bear phases.  While, things look great for this fund, one can also say that the fund has not really seen a tough time like the 2008 financial crisis which proved to be a litmus tests for many funds.

The mandate of Mirae Asset Emerging Bluechip Fund is such that it permits up to 35 percent in the top 100 companies by market cap, with a 65 percent exposure to companies that fall beyond this purview.  The company follows a flexible course in choosing its stocks but makes it clear that it will not pick up stocks of tiny-sized companies with operating profits below Rs. 100 crores.

Some of the important things that the fund looks out for are companies with decent growth potential and good return on capital employed (ROCE). It is known to buy good companies at an judicious price.

The portfolio allocation for Mirae Asset Emerging Bluechip Fund in terms of equity fund type is such that 55 to 60 percent of the corpus is usually allocated to mid-caps (higher than average ratio for the category) with a 20-30 percent allocation in large caps.  In recent times, it has been seen that the large cap exposure has moved up due to increasing amount of speculative valuations in mid and small caps. 

Due to rising valuations in the mid cap and small cap space, more mutual fund companies with mandate to invest in these stocks, are limiting investments into them, the latest being Mirae Assets Emerging Bluechip Fund. Due to overwhelming flows into the fund,  the fund stopped fresh lump sum money in its fund from October 25, 2016. The fund however, will accept money through Systematic Investment Plan (SIP) and Systematic Transfer Plan (STP) with a maximum cap of Rs. 25,000 per transaction. This is because the dramatic rally  in mid cap and small cap segment has resulted in record valuations

Since the mid cap fund category has returned 32 percent every year for the past three years, the funds have returned much higher returns compared to blue chips and such other asset classes. This made investors began pumping in more money in mid caps and small caps, which augmented their already high valuations.

Mirae Asset Emerging was launched in a bear market environment of 2010. The AUM (Assets Under Management) size increased from Rs. 140 crore in September 2013 to Rs. 3000 crore, thanks to a strong inflow of investments and equity market gains.  The fund  is a strong performer and it remains to be seen if the fund still manages to perform as well, when the tide goes against quality stocks.

Should you buy, sell or hold Mirae Asset Emerging Bluechip Fund?

The fund is proactive and watchful in its approach, which is just what an investor needs. Since, it has cut back on lump sum investments, you can invest in them through SIPs only, at least for now. Our recommendation – A must invest fund for all portfolios.

 

Pros

Excellent Performance
Excellent Consistency
Excellent Fund Size
Good Fund Manager
Good Fund House

Cons

Expensive Fund
Has not seen the downturn of 2008

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