Mirae Asset Emerging Bluechip: Buy

With a one-year return of over 65 per cent, Mirae Asset Emerging Bluechip is among the top ranking funds in the mid-cap space.

This fund is among the most consistent performers, which makes it one of the safer bets for investors boarding the mid- and small-cap bandwagon.

With stocks in this universe prone to swift rises and steep falls, stock selection and their juggling are important.

Mirae Emerging Bluechip, since its launch four years ago, has bettered the CNX Midcap index almost all the time on an annual rolling return basis. Investors who want to play the mid- and small-cap space can invest in this fund, using systematic investments to ride out volatility.

The Emerging Bluechip fund figures in the top quartile of funds in its category.

In the one- and three-year timeframes, Mirae Emerging Bluechip has beaten its benchmark by a margin of 12-19 percentage points.

While it is a relatively new fund, equity markets have had a good measure of volatility and quick rises and falls over the past three-four years.

The fund has played this volatility well, keeping well ahead of the CNX Midcap index. In the 2011 downtrend, for instance, while the index sank 36 per cent, the fund lost only 19 per cent.

It raised exposure to large-cap stocks, moved into sectors such as auto ancillaries and FMCG, made astute picks in Bata India, Divis Labs, and Gateway Distriparks.

It offloaded poor performers such as Jet Airways, Dishman Pharma and Usha Martin.

The fund then added to holdings in banks, cut exposure to software and capital goods, more or less maintained holding in pharma and FMCG, all of which helped in the 2012 rise.

In that period, the fund’s returns were 49 per cent compared with the benchmark’s 39 per cent.

With individual stock holdings rarely moving above 5 per cent of the portfolio, overall returns have been less susceptible to the volatility that mid- and small-cap stocks face.

The fund focuses on the larger mid-cap companies and does not churn sectors or stocks too often.

Some stocks, such as ICRA, Federal Bank, LIC Housing Finance, TN Newsprint, and Aditya Birla Nuvo were bought quite early, resulting in strong gains now.

The Mirae Asset Emerging Bluechip fund’s average market capitalisation is about ₹7,300 crore. But the fund does not wholly devote itself to mid-cap stocks and includes a dose of blue-chips to maintain stability, especially in falling markets.

Automobiles, chemicals, power and cement are sectors where the fund has built holdings in the past few months, with software, FMCG, pharma, and entertainment falling out of favour.