Is it Time to Exit from Mirae Asset India Equity Fund?

Mirae Asset AMC has announced to change the current Multi Cap category to Large Cap with effect from 1st May 2019.

Today’s blog is all about performance, risk rating and takeaways for existing or new investors of this fund.

Reasons for change to Mirae Large Cap Fund

CEO Mr. Swarup Mohanty’s arguments are:

  • The fund was managed as Large cap for last 4 years.
  • The fund will hold midcaps according to SEBI rules, i.e. 15% – 18%
  • Growing AUM (Assets Under Management)

A Multi Cap Fund is an Open Ended Equity Scheme investing across Large Cap, Mid Cap and Small Cap stocks. Now, the CEO says from last 4 years, the fund was managed as Large cap, which also means the fund manager has not exercised his right to invest across sectors.

Does’nt sound convincing

For eg:- If I wanted to buy this fund, then i would had gone through scheme document, key information memorandum, one pagers, amc classification, rating portals etc, I would have got impression as a Multi Cap fund.

So, when i had a look at portfolio nearly 87% is in Large cap, 11.5% in Midcap and sparing allocation to small cap.

Many investors will have to re-jig their portfolios now due to change of the scheme mandate which is a frustating job.

Rolling Returns and Risk (5 years)

Rolling Returns and Risk (2 years)

Performance Dip due to major allocation to Large cap

2 and 3 years

Decrease in outperformance

New Investor: Should I Stop / Exit?

If you have another Large cap fund, then decide which one you want to hold. All large cap fund performance will be approx same…(just few % more or less)

Existing Investor: Should I Stop / Exit?

If you have a major allocation in this fund, kindly review the situation and act upon what suits you the best.

Evaluate your position carefully. Focus on risk management instead of aggressive returns.

Investors willing to Exit from this scheme can do it freely in April 2019. No Exit Load will be levied.

Investors who cannot evaluate their scheme’s performance based on risk analysis can reach us. We will be happy to help.

#FundReview

Sundaram Midcap Fund

Sundaram Mid Cap Fund, previously known as Select Mid cap is one of the consistent performer in mid cap space since its launch in July 2002. Total AUM (Assets Under Management) is 5700 Crores, makes it stand at 4th position which has comfortably outperformed the Nifty Midcap TRI Index.

Investment Philosophy

The fund uses 5 S approach alongwith Growth at reasonable valuation.

  • Simple Business
  • Scalable Opportunity
  • Sound Management
  • Sustainable Competitive Advantages
  • Steady & Sustainable Cash-Flow

Morningstar Risk & Return Rating

Over the last 3, 5 and 10 years we see that the fund has a higher upside capture than the category but poor downside protection. So existing and potential investors should keep in this mind. See the change in numbers when you change settings to 3Y and 5Y.

Rolling Returns

10 years

Sundaram Mid Cap has an impressive long-term record, comfortably outperforming mid cap index, Franklin Prima and L & T. HDFC Mid Cap Opportunities has outperformed in its shorter history both in terms of risk and reward.

5 years

Over five years too, Sundaram Mid Cap has consistently beat Nifty Midcap 100 which is difficult to do.

Summary – Should I Invest?

Newer investors must understand that this fund can test your patience and take time to deliver. So use it only for truly long-term goals.

This is a consistent performer in the mid cap space, but do not expect downside protection from it. When the index falls, this is likely to fall more and make up for it when the cycle reverses. So unless an investor has the right mindset to weather such storms, they should consider this fund.