If you want good returns in the long term and want to become shareholders of a large capitalized company, then you should invest in mid-cap today

If you had invested Rs 6453 on 24th April 2012 in the mid-cap index, then today its value was Rs 15,609. The fund which we will review today for the mid-cap has given a good consistently returns to its category.

The fund which we are talking about, Mirae asset emerging blue-chip fund which started in June 2010 and consistently delivered 24.11%.

It has been outpaced both of its benchmarks and peers at every year since launch, though it has a limited track record, from 2011. Strong returns have helped this fund hold a five-star rating since it has rated rating in 2013.

The fund prefers larger mid-cap companies. It consciously avoids tiny-sized companies, those with operating profits below Rs 100 crore. Though the fund is quality-oriented, it hunts for businesses with decent growth prospects and a good ROCE. Buying good companies at reasonable prices is the key philosophy. The portfolio allocation shows a consistent 40-60 percent allocation to mid-caps (higher than that of the category) and a 20-40 percent to large caps.

Crisil has listed the fund at the top rating in the mid-cap category, and obvious performance of the fund translates the same thing, it is worthwhile to keep this fund in our portfolio for the long term.

Some analysis for the Mirae asset emerging blue-chip fund: –

  • The turnover ratio of the fund is 82%, So you can understand that the fund manager churns 82% of the entire portfolio in 12 months
  • To know the actual return to the fund we should look at trailing returns to the fund, if you will see the trailing return chart for 3 years of the fund, that is 29.05% while nifty free float madcap 100 (benchmark index) gave only 16.89% returns.

  • If we would compare the alpha, beta and r-squared then easily can be interpreted that fund comes in high returns and low-risk domain

  • In addition to high earnings growth potential and visibility, the fund manager also seeks for price value gap in stock selection. In terms of sector allocation, the current portfolio has a bias for cyclical sectors like banking and finance, automobile ancillaries, chemicals, capital goods etc. However, the fund also has substantial allocations to defensive sectors like pharmaceuticals, FMCG and information technology. In terms of company concentration, the portfolio of Mirae Asset Emerging Bluechip Fund is very well diversified with its top 5 holdings, Kotak Mahindra Bank, IndusInd Bank, Federal Bank Ltd, Ceat Ltd and Icici bank accounting for only 18% of the total portfolio value.

  • fund having assets of Rs 4,305 crore with an expense ratio of 1.66% in the direct fund as on 31st August 2017. and if you will compare the NAV volatility as measured by standard deviation, the volatility of Mirae asset emerging bluechip fund stood at 13.95% is lower than the average of the volatility of equity midcap funds (17.6%). Even though volatility of the fund is at below average, the Sharpe ratio is excellent that is 1.90. Risk-adjusted financial performance of investment portfolios or mutual funds is typically measured by Sharpe’s ratio. From an investor’s point of view, the ratio describes how well the return of an investment compensates the investor for the risk he takes.

If you would have invested in this fund Rs 10,000 monthly from 22nd Sep 2014 to 22nd Sep 2017 then till now you would have invested 3,60,000 but the value of invested amount has grown to Rs 5,39,759.”

At last, we can conclude this fund with the good active strategy and well-diversified portfolio can be included in our portfolio but the investor should be ready for some shortfall valuation as well, as we know this comes in the mid-cap category, so it is not fit for a short-term investment or should not be aligned with short-term goal.

Designed by Freepik

Be the first to comment

Leave a Reply

Your email address will not be published.


This site uses Akismet to reduce spam. Learn how your comment data is processed.