Mirae Asset India Opportunities Fund – A Gutsy Performer
As I write this article, bull run is at its peak and in all this frenzy the market has scaled Mt. 10K on the Nifty. Many investors who have avoided equity always for whatever reasons are also slowly realizing that investing in equity over a long term is an excellent option to create wealth and beat inflation hands on. If we talk about mutual funds in specific, mid & small cap and micro cap funds have had a dream run with the likes of Mirae Emerging Bluechip Fund, DSP BlackRock Microcap fund, Reliance Small cap Fund, L & T Emerging Businesses Fund, Can Robeco Emerging-Equities-Fund to name a few delivering excellent returns to investors. Though the performance of these funds has been commendable and worth appreciating, there is a league of retail investors who tend to look for equity exposure with stable returns and relatively less volatility.
Through this write-up, we are looking to focus on one such fund which has been a solid stable compounder for some years now which retail investors can and have in fact relied upon to achieve their long term goals.
Mirae Asset India Opportunities Fund is managed by highly competent fund manager Mr. Neelesh Surana (who also manages Mirae Asset Emerging Bluechip Fund) and Mr. Harshad Borawake. Since its inception on 4 April 2008, the fund has returned an excellent 19.55% since inception in SIP mode (The SIP returns are calculated by XIRR approach assuming an investment of 10,000/- on the 1st working day of every month) whereas benchmark has returned 12.09% in the process. The scheme is benchmarked against S&P BSE 200.
ABOUT MIRAE ASSET AS FUND HOUSE
Not many people know about Mirae as a fund house. Mirae Asset has worked hard to establish themselves as a credible AMC in the mutual fund industry. They seldom launch new funds but instead have worked hard to improve the performance of their existing funds which stands them in good stead. One will seldom see any overlap between their funds. They have come a long way from the 2008 financial crises when Mirae as a fund house saw massive redemptions in their funds. However, fund house has now established itself as a professional fund house driven by strong internal processes.
Investment Type: An Open Ended Equity Oriented Scheme ( Diversified Equity Fund)
Investment Thesis: The investment objective of the scheme is to generate long term capital appreciation by capitalizing on potential investment opportunities through predominantly investing in equities, equity related securities.
Fund Inception Date: 04 April 2008
Monthly average AUM: 3,947.45 Crores (As on June 30, 2017)
Fund Manager: Mr. Neelesh Surana (since inception of the fund)
Scheme benchmark is: S&P BSE 200
Source: Mirae Asset Mutual Fund Website (Data as on May 2017)
INVESTMENT PHILOSOPHY AND FUND’S STOCK PORTFOLIO:
Fund’s investment approach is centered around:
- participating in high-quality businesses up to a reasonable price and holding the same over an extended period of time.
- has the flexibility to invest across sectors, themes & market caps.
- combines consistency of large caps with conviction ideas from midcaps.
- focuses on companies with a sustainable competitive advantage – Stocks which have strong pricing power & are sector leaders.
Mitigation of risk, investing across sectors, themes, styles and market caps, focus on good business, consistency of performance, the dual strategy of Core and sectoral allocation, capitalization on long and short term opportunities are key features of the fund.
Currently, the fund is invested in close to 52 stocks with 63.49% in Giant, 18.13% in the Large cap, 16.32% in Mid cap and 2.05% in Small caps. Likes of HDFC Bank, HDFC ensure steady compounding. L & T is a play on capex recovery, Maruti Suzuki, IndusInd Bank, Kotak Mahindra Bank ensures extra push for returns with relatively less risk since these are excellent businesses to invest and hold on tightly for the long term.The fund manager focusses on individual business separately and its ability to generate returns over the long term. The quality of business and area in which company operates in, company’s management, and the price which one is paying for quality are important filters which dictate the fund’s stock selection capabilities. The company also don’t shy away from taking contrarian bets when quality businesses are witnessing tough times.
Fund philosophy will be incomplete without the mention of Mr.Neelesh Surana, who has brought Mirae as a fund house to the forefront as regards AMC delivering best and consistent performance is concerned. Other funds managed by same fund management team such as Mirae Asset Emerging Bluechip Fund, Mirae Asset Prudence Fund (MAPF), Mirae Asset Tax Saver Fund (MATSF) have also been consistent performers.
Stock portfolio allocation as of June 2017 is as follows:
|HDFC Bank Ltd||Banking/Finance||7.35|
|ICICI Bank Ltd||Banking/Finance||6.42|
|HDFC Ltd||Finance – Housing||4.12|
|Larsen & Toubro Ltd||Infrastructure||4.01|
|State Bank of India||Banking/Finance||3.99|
|Grasim Industries Ltd||Diversified||3.86|
|Maruti Suzuki India Ltd||Automotive||
|IndusInd Bank Ltd||Banking/Finance||
|Kotak Mahindra Bank Ltd||Banking/Finance||3.19|
Sectoral allocation as of June 2017 is as follows:
|Sector||Allocation (in %)|
|Consumer Non Durables||6.04|
Fund performance has been excellent over a short, medium and long term and it has rewarded disciplined investors who have shown trust in the fund capabilities to deliver good returns over a long term and have invested regularly via SIP mode across different market cycles. The fund came into existence in the year 2008 which was a challenging year during the financial meltdown. Every investor was running for cover, especially retail investors were a worried lot. However the fund outperformed the benchmark handsomely limiting losses to -33% as against -37% by S & P BSE Sensex and -39% by S&P BSE 200.
A good fund not only outperforms the peers on the upside but should have the capability to control losses during the market downturn. After controlling losses in the year 2008, the next year, fund again out performed, this time on the upside clocking healthy gains of 104% as against 76% by S & P BSE Sensex and 84% by S&P BSE 200. These are the traits of an excellent fund which long term investors can definitely rely upon. The fund has outperformed its benchmark since its exception which needs to be appreciated. In the year 2011 too, during the market correction phase, fund again outperformed the the benchmark limiting losses to -20% as against -25% by S & P BSE Sensex and -27% by S&P BSE 200. In the year 2017 too, fund has returned healthy returns of 21% as against 16% by S & P BSE Sensex and 18% by S&P BSE 200. Fund is a solid long term compounder as its performance stands today.
Having a glance at the absolute returns of the fund over the years as against S&P BSE 200 and S&P BSE SENSEX, the fund has been a consistent out performer showing exemplary performance both during the bull phase and more importantly also during steep market corrections.
Absolute Returns of the fund against S & P BSE 200 and S & P BSE SENSEX:
|CY YEAR||MAIOF||S&P BSE 200||S&P BSE SENSEX|
SIP RETURNS OVER THE YEARS
|SIP Investment||Since Inception||7 Years||5 Years||3 Years||1 Year|
|Total Amount Invested||11,00,000
|Mkt Value as of 30 June, 2017||28,00,598||16,43,342||10,07,289||4,61,904||1,35,465|
|Fund Return* (%)||19.55%||18.84%||20.86%||16.91%||24.91%|
|Benchmark Return* (%)||12.09%||12.09%||13.64%||11.36%||18.61%|
|Add. Benchmark Return* (%)||10.35%||9.98%||10.69%||8.38%||17.36%|
Past Performance may or may not sustained in future.
Note : For computation of since inception returns (%) the allotment NAV has been taken as 10.00. The SIP returns are calculated by XIRR approach assuming investment of 10,000/- on the 1st working day of every month.
The Fund has give tough competition to its peers in the category out performing giants such as HDFC Equity Fund, Reliance Growth Funds consistently. Consistent returns with relatively less volatility is the hallmark of the fund.
|Diversified Equity Fund||1 Year (%)||3 Year (%)||5 Year (%)|
|HDFC Equity Fund (G)||26.3||12.6||18.9|
|ICICI Pru Value Discovery Fund (G)||12.4||14.3||22.4|
|Franklin India Prima Plus (G)||18.4||17.7||20.8|
|Reliance Equity Opportunities Fund (G)||20.0||13.3||—|
|Reliance Growth Fund (G)||25.3||17.9||20.7|
|Mirae India Opportunities Fund (G)||26.1||18.5||22.8|
*Returns over 1 year are Annualised
A beta of less than 1.0 indicates that the investment will be less volatile than the benchmark index.
Volatility – 13.67%
Beta – 0.99
R Squared – 0.93
Sharpe Ratio # – 0.76
Information Ratio – 1.85
Portfolio Turnover Ratio^ – 0.68 times
Mirae Asset India Opportunities Fund has shown excellent, consistent long term performance as a dependable diversified equity fund across all market cycles. At a point when retail investors are chasing mid, small and micro cap funds in lieu of big gains, this fund has steadily created wealth for its investors. Fund has also benefitted from the way Mirae Asset as a fund house has now positioned itself with few performance oriented funds. Challenge now is to maintain the consistency in performance as the fund AUM swells to a record level and make sure no complacency creeps in. The bottom up approach which fund has adopted to invest only in quality companies has paid rich dividends and we hope it will in the future too. Excellent fund management team is key to the good performance of the fund and we hope the team keeps up with the good work and fund house is able to keep its flock together. Investors need to keep track of the fund performance periodically and make sure they keep investing regularly if fund keeps up with its good consistent performance with steady returns. As an investor, we need to make sure among the frenzy of mid and small cap funds, we have such consistent long term performer as part of our core portfolio to achieve our long term goals.
Disclaimer: The author has no investments in Mirae Asset India Opportunities Fund at present. The write-up is for information purpose only and is not a recommendation of any sort to the readers. Mutual funds are subject to market risks. Please consult your financial advisor before taking any financial decisions.