Is Mirae Assest Large Cap Fund a Good Buy?

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MIRAE ASSET LARGE CAP FUND – REGULAR
– GROWTH

Fund House

Mirae Asset India is a subsidiary of Mirae Asset Financial Group (headquartered in Seoul, South Korea) which manages $146 billion of funds in 14 countries.

In India it was established in 2007 & it has AUM of ₹41252 crore. The company has been gaining AUM over the years which is shown by increasing AUM of the years.

Market share of company (% of total industry AUM)

2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020  
0.2% 0.0% 0.0% 0.1% 0% 0.1% 0.1% 0.2% 0.2% 0.4% 0.7% 1.0% 1.6%  

(SOURCE: AMFI)


About Mirae Asset Large Cap Fund

Open ended fund (investor can enter & exit any time) which invests more than 80% of corpus in large cap focused funds (i.e. invests in Top 100 companies by market capitalization) & can add midcap companies (101st company to 150th company post top 100 companies) or money market funds upto maximum 20% of corpus.

The scheme was a multi cap scheme before being categorised as a large cap fund. It is appropriate for investors looking for 3-5 years term horizon, have average risk tolerance & one can expect returns low to medium.

How to Pick the Right Mutual Fund ?


Fund Managers

Investment Philosophy

Presently, the scheme’s fund managers —
Neelesh Surana, Harshad Borawake, and Gaurav Misra — have carefully stuck to
the fund house’s investment philosophy of investing in companies with high or
stable return ratios and stable or rising cash flows from business.

Mr. Gaurav Misra

Education: He has done BA ECO (HONS) and MBA, IIM Lucknow

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Experience: He has over 24 years of experience in investment management and
equity research functions. Prior to joining Mirae Asset Mutual Fund, he has
worked as Senior Portfolio Manager with ASK Investment Managers Limited.

Other funds: Mirae asset focused fund

Harshad Borawake

Education: Mr. Borawake is MBA(Finance) & B.E.(Polymers)

Experience: Prior to joining Mirae Asset Mutual Fund, he has worked with
Motilal Oswal Securities Ltd. as Vice President and Capmetrics & Risk
Solutions Private Ltd. as Research Analyst – Equity.

Other Funds: Mirae asset equity savings fund & Mirae asset hybrid equity fund


Returns

One time investment return (absolute)

Period (Returns (in %) 1 Year 3 Year 5 Year 10 Year
Edelweiss Large Cap Fund – Regular – Growth -9% 9% 25% 147%
ICICI Prudential Bluechip Fund – Growth -11% 5% 32% 162%
Axis Bluechip Fund – Growth -4% 15% 50%
MIRAE ASSET LARGE CAP FUND – REGULAR – GROWTH -10% 8% 44% 209%

(SOURCE – moneycontrol, As on 19 June,2020)

(SOURCE – valueresearch)

SIP Returns (absolute)

Period (Returns (in %) 1 Year 3 Year 5 Year 10 Year
Edelweiss Large Cap Fund – Regular – Growth -3% -2% 10% 57%
ICICI Prudential Bluechip Fund – Growth -5% -5% 7% 56%
Axis Bluechip Fund – Growth -4% 1% 19%
MIRAE ASSET LARGE CAP FUND – REGULAR – GROWTH -5% -3% 12% 79%

(SOURCE – moneycontrol, As on 19 June,2020)

The fund has been able to outperform other peers & the benchmark (except Axis Bluechip Fund) which shows its consistent philosophy of the fund if one considers SIP returns & one-time investment returns. Edelweiss & ICICI have significantly underperformed the benchmark returns in SIP returns but performed competitively well in one time investment returns.

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A ₹1000 investment 5 years ago would now be worth ₹1437 today & ₹1000 monthly SIP for last 5 years your ₹60,000 would have been ₹67123 (As on 19 June, 2020). (Source: moneycontrol)


Portfolio Allocation

Top
Holdings
Company Sector % Assets
HDFC Bank Financial 9.94
Reliance Industries Energy 9.5
Infosys Technology 6.36
ICICI Bank Financial 6.17
Larsen & Toubro Construction 3.65
Tata Consultancy Services Technology 3.61
ITC FMCG 3.4
Maruti Suzuki India Automobile 3.2
Axis Bank Financial 2.92
Hindustan Unilever FMCG 2.78

(SOURCE – moneycontrol)

Concentration & Valuation  
Number of Stocks 55
Top 10 Stocks (%) 51.53
Top 5 Stocks (%) 35.62
Top 3 Sectors (%) 58.69
Portfolio P/B Ratio 2.27
Portfolio P/E Ratio 18.46

(SOURCE – moneycontrol)

(SOURCE – valueresearch)

The fund is
overweight financial, communication & technology stocks compared to the benchmark.
The communication stock overweight bet shows contrarian view as it isnt
included in the benchmark.


Expense Ration Comparison

  Expense ratio (Regular) Expense ratio (Direct)
Edelweiss Large Cap Fund – Regular – Growth 2.44% 0.59%
ICICI Prudential Bluechip Fund – Growth 1.92% 1.23%
Axis Bluechip Fund – Growth 1.79% 0.44%
MIRAE ASSET LARGE CAP FUND – REGULAR – GROWTH 1.72% 0.61%

(SOURCE – valueresearch)

The expense ratio is in lowest compared to
other funds which gives higher net returns to the investors. If one goes for a
direct plan one can earn higher return as one pays approximately 1% lower fees
compared to a regular plan for Mirae Large Cap fund & over the long term it
can be significant differentiator between regular & direct plan.


Risk Elements

  • Mirae Asset courted controversy
    over the decision to reclassify its multi-cap fund as a large-cap fund. For
    whatever it is worth, it seems that as per the last portfolio disclosure, 19 of
    the 28 stocks in the new fund are also part of the erstwhile multi-cap fund
    (now large-cap fund), with a portfolio overlap of 45%.
  • Recently there were losses in
    Fixed Maturity Plans (FMP) investors which is part of debt segment the parent
    company refused to bear losses. Even though such cant occur in equity but if
    there’s sudden redemption pressure on the fund it can lead to steep decline in
    value without AMC stepping in.
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Should I Invest in Mirae Asset Large Cap Fund?

One can consider it as given its
outperformance compared to peers. It invests in most (50+ stocks) of the large
caps, it takes into account large % of 100 stocks & if one wants to add a
large cap fund It can be a part of mutual fund portfolio if you want to have an
average risk tolerance.


Similar Mutual funds

Edelweiss Large Cap Fund – Regular – Growth

Fund has 74.73% investment in indian stocks of which 57.22% is in large cap stocks, 15.35% is in mid cap stocks, 0.62% in small cap stocks. The fund is managed by Bharat Lahoti & he was associated with D.E. Shaw India Software Pvt. Ltd. as a Senior Manager – Fundamental Research and has an overall work experience of 9 years in the research function of organizations in the financial services sector & Hardik Verma he has worked with ICICI Securities.

A ₹1000 investment 5 years ago would now be worth ₹1266 today & ₹1000 monthly SIP for last 5 years your ₹60000 would have been ₹65467 (As on 19 June, 2020). (Source: moneycontrol)

ICICI Prudential Bluechip Fund – Growth

Fund has 95% investment in Indian stocks of which 81.74% is in large cap stocks, 3.94% is in mid cap stocks, 0.51% in small cap stocks. The fund is managed by Rajat Chandak & he has been associated with ICICI Prudential AMC since 2008 & Anish Tawakley & he has worked with Barclays India – Equity Research, Credit Suisse India – Equity research – Indian financial services sector.

A ₹1000 investment 5 years ago would now be worth ₹1317 today & ₹1000 monthly SIP for last 5 years your ₹60000 would have been ₹64460 (As on 19 June, 2020). (Source: moneycontrol)

Axis Bluechip Fund – Growth

Fund has 79.79% investment in Indian stocks of which 71.26% is in large cap stocks, 1.28% is in mid cap stocks. The fund is managed by Shreyash Devalkar & he has worked with BNP Paribas Mutual Fund as a Fund Manager, IDFC Capital, JP Morgan Services India and Calyon Bank. It has been able to match performance with that of Mirae’s performance.

A ₹1000 investment 5 years ago would now be worth ₹1496 today & ₹1000 monthly SIP for last 5 years your ₹60000 would have been ₹73312 (As on 19 June, 2020). (Source: moneycontrol)



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Prateek Goel
Co-founder of Investeek, Prateek has been investing in the stock markets since 2006 and has beaten the NSE/BSE on a consistent basis. At the age of 24, he was also featured in India Today for his expert insight on gold trading.
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