Mirae Asset India Opportunities - BUY

Even as large-cap indices have barely managed low, single-digit annual returns since 2011, select funds have outperformed. Mirae Asset India Opportunities, despite its large-cap bias, has clocked healthy double-digit returns during this period. The fund has been the most consistent performer in the multi-cap category, garnering top quartile returns across all time periods.

In the last five years, the fund clocked returns higher than the BSE 200, its benchmark, almost 99 per cent of the time. It also bettered its peers — Birla Sun Life Equity, Canara Robeco Equity Diversified and Franklin India Opportunities — over one-, three- and five-year time periods. Investors with a moderate risk appetite and a three-to-five-year investment horizon can consider buying units of the scheme.

The right sector shifts and stock choices helped the fund’s outperformance. For instance, the strategy to increase allocation to financials and healthcare during 2009-11 boosted the fund’s returns. Likewise, the adept move to cut exposure to banking stocks and increasing allocation to IT stocks in early 2013 lifted the fund’s NAV. In addition to IT and pharma stocks such as IPCA Labs, Aurobindo Pharma, Lupin and TCS, catching Amara Raja Batteries and Tata Motors early boosted its five-year returns. The scheme not only outpaced its benchmark during rally phases but has also been successful in containing downsides during corrective phases. Despite the flexibility to invest across market caps, the fund’s strategy to invest a majority of its assets in large-cap stocks helped it curb the NAV fall better during volatile markets. A systematic investment in the fund over the last five years would have yielded gains in excess of 12.5 per cent annually.

In the last one year, the fund has increased exposure to foreign exchange earners — IT and healthcare, in addition to select cyclical themes such as oil and gas and metals. Despite its growth-investing approach, the fund has reduced exposure to overvalued themes such as consumer goods. Likewise, it has reduced exposure to stocks in the auto and financials space.

It has also bought into large-cap stocks during this period, evident from the increase in its weighted average market cap from about ₹88,000 crore to over ₹1 lakh crore. Mirae India Opportunities Fund currently holds 53 stocks in its portfolio. Its large-cap bias may hold the fund steady during volatile times. High exposure to export-reliant themes such as pharma will benefit the fund in the short term should the weakness in rupee sustain. In addition to this, cyclical bets will add spice to the portfolio in the event of a recovery in the country’s economy.

COMMENT NOW