Understanding the Mirae Asset fund recategorization

By Morningstar |  07-06-19 | 
 

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I have Franklin India Smaller, HDFC Hybrid Equity, Mirae Asset India Equity. I was thinking of switching Mirae Multicap with Mirae Emerging Bluechip. What do you advise?

Rajni

Recently, Mirae Asset India Equity Fund underwent a change in category from multi-cap to large-cap. Consequently, the fund’s name has also been rechristened as Mirae Asset Large Cap Fund. It’s a well-managed strategy with a strong long-term track record. Also, the change in the category is in line with the way this fund has been historically managed. Being a large-cap focused fund and the only dedicated large cap fund in your portfolio currently, it’s an apt fit in your portfolio and hence there is no need to replace this fund.

Mirae Asset Emerging Bluechip Fund is from Large & Mid Cap category. It is also a good fund with a noteworthy long-term track record. You can consider adding this fund too in your portfolio.

Both the funds have a Morningstar Analyst Rating of Silver and can co-exist in a portfolio.

I am 32 years old and SIPs worth around Rs 85,000: Axis Focussed 25 (20k), L&T India Value (20k), Mirae India Equity (20k), L&T Midcap (5k), HDFC Small Cap (8k), HDFC Hybrid (7k), Mirae Consumer (2.5k). Suggest me replacement for Mirae India as it turning into a large-cap fund, and please let me know if I need to reduce no of funds.

- Arvind

Mirae India Large Cap (erstwhile Mirae India Equity) was launched in 2008. Post recategorization, this fund was placed under the multi-cap category. While the fund had the flexibility to invest across market caps, however, it has historically maintained a significant stake of around 75% in large size companies, focusing primarily on high-growth stocks. Therefore, the change in the category should not be a concern given the fund’s historical large-cap tilt. The fund house is also of the opinion that the large-cap category is the right one since the fund has been running a large-cap heavy portfolio historically.

Moreover, the fund manages a corpus of over Rs 10,000 crores. As inflows lead to a ballooning in size, it will have the advantage of being in large-cap space considering the liquidity aspect and the element of stability, which will help deliver consistent performance.

Regarding your last question, the number of funds seems to be fine, but suggest that large-cap funds should ideally form the core holding of any investors portfolio. While they may not be huge wealth creators such as small/Mid cap funds, from an asset allocation perspective, large cap funds add an element of stability to portfolios.

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