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Mirae Asset Emerging Blue Chip Fund: Ace Mid cap Fund
Tue, Nov 17, 2015
Source : Khyati Shah, Citrus Interactive

MiraeAsset Emerging Blue Chip Fund is a mid-cap equity diversified fund. The fund predominantly invests in Indian equities which are not part of the top 100 stocks by market capitalization and have market capitalization of atleast Rs.100 Crores at the time of investment. The fund was launched in July 2010 and is benchmarked against the CNX Midcap Index. The fund has an AUM of Rs.1,016 crores as on October 31, 2015 which has gone up by Rs. 458 crores as compared to last year i.e. October 31, 2014 which was Rs. 558 crores.

 

Performance

The fund has outperformed the benchmark index and category average over different time horizons. The fund’s performance across the time horizon is excellent as shown from the table given below. Its performance since inception has been better that its benchmark by over 14.49percentage points. And in the time horizon of YTD, 6 Months, 1, 2 and 3 years it has clearly been in the top quartile of its peer-set.

Scheme Name

YTD

6 Months

1 Year

2 Years

3 Years

Since Inception

Mirae Asset Emerging BlueChip Fund (G)

10.9

8.04

19.95

50.68

33.78

23.67

CNX Midcap

5.2

4.33

11.8

32.6

19.49

9.18

Category Average

2.99

1.74

7.94

29.04

21.06

NA

Rank

9/158

3/161

10/158

8/148

7/145

NA

Figures are in % as on October31, 2015; Returns above 1-year in Compounded Annual Growth Rate (CAGR)

When we look at the calendar year returns it’s quite clear that this fund has beaten its category average in each of the last four calendar years.The fund has beaten its benchmark in all the four years i.e 2011, 2012, 2013 and 2014 by margins of 15.85, 6.4, 13.71and 28.71 percentage points respectively. The fund provided sound downside protection to its investors in the declining market of 2011.

Scheme Name

2011

2012

2013

2014

Mirae Asset Emerging BlueChip Fund (G)

-15.15

45.56

8.61

84.62

CNX Midcap

-31.00

39.16

-5.10

55.91

Category Average

-23.95

34.05

5.43

53.99

Rank

5/138

18/142

36/146

12/149

All figures in %

Risk: In terms of measures of risk such as standard deviation and beta (measured over last three years), the fund has taken lower risk compared to the category.

 

Standard Deviation

Beta

Mirae Asset Emerging BlueChip Fund (G)

0.94

0.76

Category Median

0.95

0.88

 

Risk-adjusted Returns: In terms of measures of risk such as Treynor& Sharpe (measured over last three years), the fund has taken slightly higher risk compared to the category median.

 

Treynor

Sharpe

Mirae Asset Emerging BlueChip Fund (G)

0.14

0.12

Category Median

0.07

0.07

 

Portfolio Characteristics:

Sector concentration: The concentration of the fund in the top three, five and 10 sectors is much lower than the category median.


Top 3

Top 5

Top 10

Mirae Asset Emerging BlueChip Fund (G)

29.09

38.38

54.62

Category Median

37.35

50.17

71.33

 

Company concentration: The fund is diversified with concentration in top three, five and ten companies in its portfolio much lower than the category median.

 

Top 3

Top 5

Top 10

Mirae Asset Emerging BlueChip Fund (G)

10.53

16.53

29.02

Category Median

19.3

27.86

44.67

                                               

Number of equity holdings: The fund currently holds 64 stocks in its portfolio (September 30, 2015), which is much higher than the median stock count for the diversified-equity category, which currently stands at 46. Thus, based on equity count the fund runs a diversified portfolio compared to its peer set. Since Inception the fund has always had a diversified portfolio with the number of equity holdings averaging 54.47.

Cash allocation: Its cash allocation at the end of September 2015 was 1.23 per cent. The fund has had an average cash allocation of 4.89 per cent since its inception. Its maximum allocation to cash over last two years was 7.69 per cent in May 2014 and lowest was 1.23 per cent in September 2015. In 2015 it had an average cash allocation of 2.67 per cent. Thus on the whole the fund maintains low allocation to cash – which is a positive.

The top 5 sectors in the portfolio had an allocation of 38.38% which is lower than the category average of 49.61%. The fund’s exposure to cyclical stocks currently is 70.47% followed by Defensives with 19.36% & Services with 10.03%. The Top five holding are Kotak Mahindra Bank Ltd., Hindustan Petroleum Corporation Ltd., NatcoPharma Ltd., Torrent Pharmaceuticals Ltd. and Amara Raja Batteries Ltd.

In the last six months the fund has brought stocks of Credit Analysis And Research Ltd., Sanofi India Ltd., Aarti Industries Ltd., MothersonSumi Systems Ltd., Supreme Industries Ltd., Ceat Ltd., Hexaware Technologies Ltd., Mphasis Ltd., Nilkamal Ltd., Zee Entertainment Enterprises Ltd., IndusInd Bank Ltd. and Blue Dart Express Ltd.

Whereas stocks of Gayatri Projects Ltd., Indian Bank, Solar Industries (India) Ltd., Dewan Housing Finance Corporation Ltd., Pidilite Industries Ltd., Tech Mahindra Ltd., Sun TV Network Ltd., Eicher Motors Ltd. and Titagarh Wagons Ltd.have been dropped from the portfolio.

Considering that the fund invests in the volatile mid-cap space, one would like to reiterate that investors must invest in mid caps for the long term.

Thus, based on criteria such as equity count, sector concentration and company concentration, one can conclude that the fund runs a well-diversified portfolio.

 

Processes:

The portfolio has predominantly securities of companies (more than 65%) which are not part of the top 100 stocks by market capitalization and have market capitalization of at least Rs.100 crore at the time of investment. The fund seeks to generate consistent capital appreciation by investing in quality mid-sized companies, which have sustainable competitive advantage as is reflected in the return on investment, growth profile, etc.

Expense ratio: The fund has an expense ratio of 2.51 per cent. This is 6 basis points (1 basis point is 100th of a percent) higher than the median for the diversified-equity category (2.45 per cent).

Exit load:  The fund has an exit load of 2 per cent for redemption within 182 days (6 months) and 1 per cent for redemption between 183-365 days (after 6 months) and NIL after 365 days (1 Year). Most funds in the equity category have a flat exit load of 1 per cent till 365 days.

 

Fund Manager

Mr. Neelesh Surana is the Head of Equity and Fund Manager at Mirae Asset Global Investments (India) Pvt. Ltd. Mr. Surana spearheads the equity research and investment function at the firm. He has over 18 years of experience in the financial services industry (including fund management). He is also responsible for the managing the firm's existing equity funds and providing research support for its global mandate. Mr. Surana's secondary responsibilities at the firm include portfolio construction and monitoring. He joined the firm in 2008. Mr. Surana has over 18 years of experience in equity research and portfolio management. He previously served as a Senior Portfolio Manager at ASK Investment Managers Ltd. Mr. Surana was responsible for managing domestic and international portfolios at the firm. He was also responsible for tracking sectors like metals, fast moving consumer goods, and pharmaceuticals at the firm. Mr. Surana holds an MBA in Finance and a BE degree in Mechanical Engineering.He also co-manages Mirae Asset India-China Consumption Fund and Mirae Asset India Opportunities Fund with Gopal Agrawal.

He also manages Mirae Asset India Opportunities – which is a large cap oriented fund with a strong track record.

Earlier this fund was also co-managed by Gopal Agrawal and Neelesh Surana. Both were managers since inception (July 2010).

 

View

In its short duration of existence the fund has seen a bear and a bull phase, and has out-performed in both. Its philosophy of being fully invested and the focus on quality stocks has enabled it to do well since its inception. Besides the fund’s performance, an experienced fund management team is also a point in the fund’s favour.Mirae Asset Emerging BluechipFund may be considered for portfolios with long investment horizons.

 
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