Mirae Asset India Opportunities - INVEST

Consistent bettering of benchmark and flexible exposure across large-, mid- and small-cap stocks makes Mirae Asset India Opportunities Fund a good bet. The fund aims to pick stocks that are reasonably valued, but which are fairly large or leaders in their sectors.

Investors with a higher risk appetite can invest in the fund. While the fund has a large-cap bias, the presence of mid-cap and small-cap stocks pegs up the overall risk profile. The fund is also smaller than peers. Further, it sports a shorter track record than peers, having been launched in March 2008.

Still, the fund sailed through both the 2011 and 2008 market downturns, which showcases its mettle in delivering across market cycles.

Performance

With a one- and three-year return of 10 per cent, each, the fund has soundly beaten its benchmark BSE 200 by a good margin of 4 and 6 percentage points. During 2011, the fund contained loss to 20 per cent while the BSE 200 dropped 27 per cent. In fact, on a rolling return basis, the fund has stayed ahead of benchmark over 90 per cent of the time.

While the fund’s returns pale in comparison with Reliance Equity Opportunities, it is ahead of most other ‘opportunities’ peers. Returns are in line with UTI Opportunities and diversified funds such as Canara Robeco Equity Diversified.

Strategy : In the current portfolio, share of large-cap stocks (those with market capitalisation of over Rs 7,500 crore) is at 78 per cent, a level similar to that in 2011. But during boom times — the 2009-10 run — the fund pruned this share to 60-65 per cent and brought in far more mid-cap and small-cap stocks to deliver higher returns. Portfolio valuations, even then, were reasonable compared with Sensex and broader market valuations.

The fund has also taken timely sector calls. For instance, it built up holdings in metal and steel stocks through 2009, when commodity stocks were doing well. It began pruning this holding from early 2011, and the two sectors have had a poor run over the past year. It drastically brought down exposure to power stocks by end-2010, a good move with both power and infrastructure stocks failing to rally.

Similarly, the fund sharply lowered exposure to banking stocks in mid-2011 and quickly built it back up at the start of 2012, increasing share of out-performers such as ICICI Bank and HDFC Bank. Banking and finance stocks make up the lion’s share of the portfolio at 25 per cent.

Of late, the fund has been cutting exposure to FMCG stocks too. Other timely bets include cigarette stocks — first ITC in late 2011 and later Godfrey Philips — and individual picks such as Titan Industries and JK Cements.

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