Mirae Asset India Equity Fund: Stock selection aids outperformance

Mirae Asset India Equity Fund was launched in April 2008 as Mirae Asset India Opportunities Fund. After the reclassification and rationalisation of mutual funds by the Securities and Exchange Board of India (Sebi), the scheme was renamed Mirae Asset India Equity Fund in March 2018. It featured in the top 30 percentile in the multi-cap category of CRISIL Mutual Fund Ranking (CMFR) during the three quarters ended December 2018. The fund is being managed by Neelesh Surana, Harshad Borawake and Gaurav Mishra since May 2008, May 2017 and January 2019, respectively. Its month-end assets under management (AUM) increased over seven times from Rs 1,454 crore in February 2016 to Rs 10,343 crore in January 2019.

The investment objective of the scheme is to generate long-term capital appreciation by capitalising on potential investment opportunities through predominantly investing in equities and equity-related securities.

Consistent performance

The fund has consistently outperformed the benchmark (S&P BSE 200 TRI) and its peers (funds ranked under the multi-cap category in December 2018 CMFR) in all the trailing periods under analysis. The fund outperformed the benchmark and peers in all market phases under analysis, including the recent liquidity tightening in the lending sector. An investment of Rs 10,000 in the fund on April 4, 2008 (inception of the fund), would have grown to Rs 46,995 on February 15, 2019, at 15.29 per cent CAGR compared with the category and the benchmark, which would have grown to Rs 32,756 (11.53 per cent CAGR) and Rs 27,633 (9.8 per cent CAGR), respectively.

Systematic investment plan (SIP) is a disciplined mode of investing offered by mutual funds through which one can invest a certain amount at regular intervals. A monthly investment of Rs 10,000 for the past 10 years in the fund would have grown to Rs 27.18 lakh (15.72 per cent XIRR) on February 15, 2019, compared Rs Rs 21.73 lakh (11.51 per cent XIRR) in the benchmark during the same period.

Portfolio analysis

In the past three years, the fund has maintained a predominant allocation to large-cap stocks — averaging 81.56 per cent, while mid-cap and small-cap allocations averaged 10.38 per cent and 5.41 per cent, respectively.

It took exposure to 28 sectors during the three years. The top five sectors were banks (average allocation of 26.5 per cent), software (8.59 per cent), consumer non-durables (7.9 per cent), auto (7.3 per cent), and petroleum products (6.7 per cent).

HDFC Bank, Reliance Industries, ICICI Bank, Maruti Suzuki, and HDFC have been major contributors to the fund’s performance during the past three years. They were consistently held during this period. The fund invested in 107 stocks during the past three years out of which it held 30 stocks consistently. Out of the 30 consistently held stocks, 20 outperformed the fund’s benchmark during this period, thus indicating strong conviction and effective stock selection by the fund management.

CRISIL Research