Mirae asset emerging blue-chip fund (MAEBF) - A consistent performer in Large & Midcap category.

 

Mirae asset emerging blue-chip fund (MAEBF) is an open-ended scheme in the Large & Mid-cap category. The Fund was launched in July 2010 and has given annualized returns of more than 20% since inception. The objective statement of the fund is as under:

The investment objective of the scheme is to generate income and capital appreciation from a portfolio primarily investing in Indian equities and equity-related securities of large-cap and mid-cap companies at the time of investment. From time to time, the fund manager may also seek participation in other Indian equity and equity-related securities to achieve optimal Portfolio construction.


Fact sheet

  • The Fund belongs to the large & mid-cap category and invests a minimum of 35% in large-cap stocks and a minimum of 35% in midcap stocks.
  • The fund was initially a mid-cap fund but later positioned as a large & midcap fund in 2018.
  • The fund is managed by Mr. Neelesh Surana and Mr. Ankit Jain. Mr. Neelesh Surana is the Chief Investment Officer at Mirae asset management.
  • The present Assets Under Management (AUM) is app 16000 Crores. The recommended duration for investment in the scheme is more than seven years.
  • The Scheme has consistently remained in the top 5 funds of the category.
  • The fund is not accepting lump sum investment since October 2016. Further, the SIP amount is also capped at Rs. 2500 per month per investor from November 2020.
  • The expense ratio (March 2021) is 1.81% for the regular fund and 0.70% for Direct Fund.
  • There is not any entry load. The exit load is 1.00% if the units are redeemed within 365 days from the date of allotment.
  • The fund manager intends to buy quality companies at a reasonable price. These businesses then hold for a long period.


Why I Like the Scheme

This fund has remained part of my mutual fund portfolio for the last five years due to the following reasons:

Superior Returns

Mid-cap funds tend to deliver a better return than large-cap funds in the long term; however, they are also more volatile. The Large and mid-cap category funds are ideal to get the benefit of higher returns than large-cap funds with lower volatility of mid-cap mutual fund schemes. MAEBF has consistently delivered high returns. The fund has delivered annualized returns of more than 20% since inception and has remained in top performers.

Fund Manager

The fund is managed by Mr. Neelesh Surana, CIO at Mirae asset management. Sh Surana is regarded as one of the best mutual fund managers of recent times and the same reflects in the performance of funds managed by him.

Low Expense ratio

The expense ratio of the fund is relatively lower than that of other schemes in the category. The expense ratio of Mirae asset emerging bluechip fund- Growth –Direct plan is 0.70% as against the category average of 1.04%.

Investment Strategy

The fund follows a growth at a reasonable price approach. In his letter on the completion of 10 years of the fund, Mr. Surana apprised his investment strategy as under:

Our investment philosophy is centered on participating in quality businesses, but up to a reasonable valuation. We seek to identify growth-oriented businesses run by competent management, and yet available at reasonable valuations. An analysis of all three buckets ‒ Business, Management, and Valuation ‒ is important from a risk-reward matrix. E.g., a great business often comes with expensive price tags ‒ thus, great businesses may not always be great stocks.

Cap on Investments

The fund house has put a cap on fresh investments at times in the interest of investors of the scheme. The fund house had stopped accepting lump-sum investments from October 2016. The monthly SIP amount has been capped at Rs. 2500 from November 2020. At times when many mutual fund schemes are in a race to increase AUM size, the fund has preferred to protect investor interest.

As per the communication of fund house

Mirae Asset Emerging Blue-chip is a scalable product and a gradual inflow may benefit our investors.


Top Holdings

The Top 10 holdings of fund and %age of AUM are as under:

Sr. No

Company

%age

1.     

HDFC Bank Limited

6.66%

2.     

ICICI Bank Limited

6.35%

3.     

Infosys Limited

5.34%

4.     

Axis Bank Limited

4.73%

5.     

State Bank of India

3.25%

6.     

Bharti Airtel Limited

3.06%

7.     

Tata Consultancy Services Limited

3.00%

8.     

Voltas Limited

2.60%

9.     

Maruti Suzuki India Limited

2.38%

10.   

Gujrat State Petronet Limited

2.32%

 

Returns

The absolute and SIP returns of funds along with the rank within the category (as of 31.03.2021) are as detailed below:

Period of Investment

Annualized return

Category Average

Rank Within Category

2 years

20.51%

14.12%

2/26

3 years

15.90%

9.13%

3/24

5 years

20.40%

13.60%

1/23

10 years

21.43%

12.60%

1/21

Since Inception

20.94%

15.95%

5/30


SIP returns

Period of Investment

Annualized return

2 years

34.10%

3 years

25.07%

5 years

19.39%

10 years

22.62%

            Source: www.moneycontrol.com

The fund has consistently remained within the top funds in the category in terms of returns. The SIP return for the ten-year time frame is 22.62%. The return during recent years may not be representative of long-term returns as the market had crashed due to COVID-19 and than has recovered to achieve an all-time high.

 

Suitability for Investors

The fund is suitable for investors with moderate to high-risk profiles. The conservative investors may avoid the scheme and may invest through an Index fund, hybrid fund, or large-cap mutual fund.

 

My Return Expectations from the Scheme

I expect a long-term return of 17%- 20% from the scheme with a minimum holding period of 7 years. With the benefits of recent structural reforms by the government like GST with push on infrastructure etc., the midcap companies are expected to benefit and to do well. Hence with an experienced fund manager and sound investment processes, the scheme may deliver high returns in the coming years.


Conclusion

If you have a moderate to high-risk profile you may consider investing in the fund up to a maximum of 10% of your mutual fund portfolio. The investment can be made for the goals which are at least seven years away. The fund may help in building wealth to achieve long-term goals.

 

Sources:

https://www.miraeassetmf.co.in/docs/default-source/marketing-insights/mr-neelesh-suraana-cio---note---10-year-journey.pdf

https://www.miraeassetmf.co.in/mutual-fund-scheme/equity-fund/mirae-asset-emerging-bluechip-fund


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