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With Covid-19 bringing the world to its knees, stock markets continue to remain volatile. Investors looking for safe and stable funds to invest in during such times can go for Mirae Asset Large Cap.
The fund is mandated to invest at least 80 per cent of its portfolio in large-cap stocks (currently those with market capitalisation of over ₹26,000 crore) as per SEBI’s classification norms.
Considering that these stocks usually remain more resilient during market falls, the scheme could provide better downside protection than funds focussed on mid- and small-cap categories, at this juncture.
Strategy and performance
Mirae Asset Large Cap has undergone name changes twice in the recent past. First, in early 2018, when it was changed from Mirae Asset India Opportunities to Mirae Asset India Equity, and again in May 2019 when it was rechristened Mirae Asset Large Cap
While it was benchmarked to the BSE 200 TRI earlier, it is now benchmarked to the Nifty 100 TRI. However, the fund’s strategy of investing predominantly in large-cap stocks has not changed over the years.
Though in its earlier avatars it was usually classified as a multi-cap fund given that it carried the ‘opportunities’ tag, the scheme stuck to investing in large-caps for a good part of its portfolio.
Hence, the fund’s long-term track record cannot entirely be dismissed and remains relevant.
On this front, it has scored well, faring better than both the BSE 200 TRI as well as the Nifty 100 TRI in falling and volatile markets such as those in 2011, 2013, 2015 and 2016.
In 2019 (the year of reclassification as large-cap fund), too, the fund outperformed the benchmark.
Apart from downside containment, the scheme also does not miss out on rallies. Its ability to deploy 95-99 per cent of its holdings in equities without taking cash or debt calls is one reason for this. Over one-, three- and five-year periods, the fund has beaten both the BSE 200 TRI and Nifty 100 TRI by up to 2.2 percentage points.
In these time-frames, it has also outdone peers such as ICICI Prudential Bluechip, Franklin India Bluechip and HDFC Top 100.
The fund usually holds 50-60 stocks. While it takes 5-10 per cent exposure in its top five holdings, the rest of the holdings are not concentrated.
Portfolio choices
Banking is the preferred sector for the fund; HDFC Bank, ICICI Bank, SBI and Axis Bank are among the top holdings in this space. In the past year, it has upped its banking exposure by about five percentage points.
Considering the market volatility, holdings in consumer non-durables have been raised slightly in the past year.
With FMCG behemoth Hindustan Unilever recording steady performance amidst the consumption slowdown, exposure to this stock has been upped in this period. Britannia Industries is a recent addition.
The fund is also betting on a turnaround in the automobile sector sooner than later. It hiked its stake in Maruti Suzuki India in the recent past, and added Ashok Leyland as well.
Following the SEBI mandate, the fund has held over 80 per cent in large-caps in the past year. In the latest February portfolio, large-cap stocks constituted 86 per cent of the total holdings. Prominent mid-cap stocks in the fund include Equitas, Kajaria Ceramics, Voltas and Page Industries.
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