Mirae Asset Large & Midcap Fund Reinvestment of Income Distribution cum cptl wdrl INF769K01119

The team combines fundamental bottom-up analysis with quantitative screening to uncover companies that exhibit scalable business models, steady cash flows, and sustainable earnings growth. Valuation metrics such as P/ E, price/ book, and enterprise value/ EBITDA play a key role in stock selection, with a preference for companies generating EBITDA/ cash flows of at least 100 crores. This approach avoids early-stage small companies, focusing instead on mid-caps with the potential to evolve into large-cap leaders.

While selecting mid-cap stocks, the manager typically looks for slightly higher return on equity and growth rates as compared with large-cap stocks, given these stocks come with liquidity and other risks. Qualitative factors, such as management quality, governance standards, and execution capabilities, are rigorously assessed using a 10-year historical track record to reduce subjectivity. Regular interactions with company management, supplemented by insights from their internal global research team and sell-side analysis, provide a comprehensive understanding of industry dynamics and company-specific factors.

The strategy is benchmark-aware yet maintains a well-diversified portfolio across sectors and market capitalizations. Adopting a long-term buy-and-hold approach, the fund avoids momentum-driven plays, ensuring alignment with its philosophy of sustainable growth. This disciplined process aims to deliver superior risk-adjusted returns over the long term while mitigating concentration and liquidity risks.

The fund maintains a well-diversified portfolio balancing stability and growth across large- and mid-cap stocks. The fund’s portfolio construction adheres to its targeted 50/50 allocation between large- and mid-cap stocks, with a permissible deviation of plus or minus 10%. This structure allows the fund to leverage the growth potential of mid-caps while retaining the liquidity and stability of large-cap holdings.

The fund's investment philosophy prioritizes the merit of the underlying business, focusing on growth prospects, scalable models, and strong management quality, irrespective of the company size. Liquidity remains a key consideration, ensuring that the portfolio’s holdings align with the fund’s increasing size. The fund has increased the number of holdings in its portfolio, which helps mitigate liquidity risk, with top holdings maintaining strong liquidity profiles. Smaller positions often reflect legacy holdings or risk-adjusted allocations.

Sectorwise, the fund maintains a balanced exposure, favoring financials, consumer cyclical, and industrials, while avoiding sectors like real estate and construction due to their lower cash flows and returns on capital employed. The fund follows a fully invested approach, minimizing cash holdings and avoiding frequent portfolio churn. This disciplined portfolio management approach ensures alignment with the fund’s long-term investment philosophy, enabling it to navigate varying market cycles effectively.