Mirae Asset Focused Fund: Will this make a difference?

Published: April 24, 2019 at 9:04 am

Last Updated on December 29, 2021 at 12:59 pm

Mirae Asset Focused Fund will invest in 30 stocks across all market caps. The NFO opened on April 23 and will remain open until 7th May and then re-open for continuous purchase on 15th May. We discuss if this will make a difference in the already crowded focused/multicap space.

Many feel that this fund launch is the reason behind Mirae India Equity Fund becoming Mirae Large Cap Fund. All AMCs are asset gatherers and they need new products from time to time for AUM and profit, hoping that investor clutter up their portfolios on a fear of missing out. For this a juicy inviting presentation on “what makes this fund special is necessary”

I find the promotional material for Mirae Asset Focused Fund on their site, rather dull and insipid. This the product tag line or description:

An open-ended equity scheme investing in a maximum of 30 stocks intending to focus in large cap, mid cap and small cap category (i.e., Multi-cap)

Hang on. “focus in large cap, mid cap and small cap category”? That is like saying I will focus on everything! “Focus” here refers to a limited of stocks does it not? That is Sebi’s definition. That is a bad first impression.
Mirae Asset Focused Fund: Will this make a difference?
Image courtesy: Mirae Asset. Usage: “Fair use”

The investment strategy of Mirae Asset Focused Fund

Aside from investing in 30 stocks across market cap, the fund wants to build a portfolio of strong growth companies managing concentration risk and liquidity risk in various ways.

Join over 32,000 readers and get free money management solutions delivered to your inbox! Subscribe to get posts via email!
🔥Enjoy massive discounts on our robo-advisory tool & courses! 🔥

It can hold up to 35% in bonds so it can act as an aggressive hybrid fund (possibly to reduce the risk associated with the concentrated stock portfolio) if it wanted to.  Out of the full portfolio, a maximum of half can be in derivatives (arbitrage opportunities) – but this is more of freedom on paper and rarely implemented in full by many funds.

The scheme will invest in companies with robust business models with sustainable competitive advantages and have high return ratios. Well, that is what they all say.

In addition to using bonds and derivatives to control risk, the Mirae Asset Focused Fund will reduce concentration risk (the biggest risk as well reward factor in focused funds) by monitoring stock trading volumes (to access liquidity), ensure proper diversification across sectors and market cap.

The fund has set a benchmark of Nifty 200 TRI. This is not too different from Nifty 50 due to the market cap weighting of the index. So it should not be much of a challenge for the fund manager to beat this (in terms of returns. Risk remains to be seen)

List of Focused Funds (as on April 2019)

There are currently 17 focused funds and Mirae Asset Focused Fund would be the 18th. If we ask, what does this NFO have that the other 17 do not? The answer is not clear, at least to me, from the material presently available on their website. Distributors may have a flashier file with instructions to sell hard (the fund has to collect at least 10 Crores or close. Of course, they would easily do a lot more than this – most of it regular plan aum)

This listing in terms of decreasing AUM. Notice that it is not too much in the focused space.  Sudden AUM growth will be a problem but Mirae could do what they did to Mirae Emerging Bluechip Fund (when this was mid capish, lump sum investment were suspended in Oct 2016 when AUM was only ~ 3100 Crores and not opened yet!)

FundCategoryNet Assets (Cr)
Franklin India Focused Equity FundEQ-MLC8207.75
Axis Focused 25 FundEQ-MLC7189.83
Reliance Focused Equity FundEQ-MLC4465.54
Aditya Birla Sun Life Focused Equity FundEQ-LC4268.37
SBI Focused Equity FundEQ-MLC4033.39
DSP Focus FundEQ-MLC2178.91
IDFC Focused Equity FundEQ-MLC1620.62
Motilal Oswal Focused 25 FundEQ-LC1105.82
Sundaram Select Focus FundEQ-LC966.09
ICICI Prudential Focused Equity FundEQ-MLC664.19
L&T Focused Equity FundEQ-MLC568.18
HDFC Focused 30 FundEQ-MLC469.27
Principal Focused Multicap FundEQ-MLC319.04
IDBI Focused 30 Equity FundEQ-LC277.56
BNP Paribas Focused 25 Equity FundEQ-MLC249.22
IIFL Focused Equity FundEQ-MLC179.67
Quant Focused FundEQ-LC4.09

Will Mirae Asset Focused Fund make a difference?

As of now, I do not see anything special or inviting to assume that it would make a difference. As an analyst (not investor, see below) one should wait and watch.  Has Mirae missed a trick by not naming Neelesh Surana along with Gaurav Misra (who co-manager of Mirae Asset India Equity Fund)?  Probably yes IMO, but it also means that they do not want to depend on one person too much.

Should you invest in this fund?

There are only two reasons one has to consider a focused fund. (1) Take a gamble on higher risk (due to the reduced number of stocks in the portfolio) hoping it will fetch higher returns (2) assume focused funds will have better sector and market cap representation.
Of course, all this assuming that the focused fund will be a core component of the portfolio else it will not make much of a difference. I doubt it if many investors would be willing to do that. They many interested but only for a “small exposure”, something I would like to call as small exposure syndrome.
Therefore, this is what I would suggest. If your portfolio needs it (and only if your portfolio needs it), you should consider a focused fund and that too only if you are willing to take on at least 30% exposure for goals that are several years away. Do not go by the AMCs “Recommended Investment Horizon”  which is 3-5Years or more for this fund.
If you actually have a need for this, you can take a chance with this fund if you like Mirae’s management and wish to start with a fund with low AUM. Choosing better established focused funds is fine but that would higher AUM. We do not know at what AUM does it become difficult for a fund to remain “focused across market cap” and become “focused large cap” funds. Either way, it does not matter as knowing how to review a fund is more important than selecting one.
Do you really have a need to invest in this (or any) NFO? Do you have the confidence to invest heavily in a focused fund (if necessary) and that too in an NFO? If yes, then go ahead. You have my respect.
For most people reading this, there would be no need for this or any NFO. Yet many would be “interested” in every NFO peddled by AMCs.
A fool and his money are welcomed!
The Official Rules: 5,427 Laws, Principles, and Axioms to Help You Cope with Crisis, Deadlines, Bad Luck, Rude Behavior, Red Tape, and Attacks by Inanimate Objects.’’ by Paul Dickson (page 181)
How about if we wait and watch for it perform and then consider it? Well genius, by that time, there would be no need for it in your portfolio!
Do share this article with your friends using the buttons below.

🔥Enjoy massive discounts on our courses, robo-advisory tool and exclusive investor circle! 🔥& join our community of 5000+ users!
Use our Robo-advisory Tool for a start-to-finish financial plan! More than 1,000 investors and advisors use this!
New Tool! => Track your mutual funds and stock investments with this Google Sheet!
We also publish monthly equity mutual funds, debt and hybrid mutual funds, index funds and ETF screeners and momentum, low-volatility stock screeners.
Follow Freefincal on Google News
Follow Freefincal on Google News
Subscribe to the freefincal Youtube Channel. Subscribe button courtesy: Vecteezy.
Subscribe to the freefincal Youtube Channel.
Follow freefincal on WhatsApp Channel
Follow freefincal on WhatsApp
Podcast: Let's Get RICH With PATTU! Every single Indian CAN grow their wealth! 
Listen to the Lets Get Rich with Pattu Podcast
Listen to the Let's Get Rich with Pattu Podcast
You can watch podcast episodes on the OfSpin Media Friends YouTube Channel.
Lets Get RICH With PATTU podcast on YouTube
Let's Get RICH With PATTU podcast on YouTube.
🔥Now Watch Let's Get Rich With Pattu தமிழில் (in Tamil)! 🔥
  • Do you have a comment about the above article? Reach out to us on Twitter: @freefincal or @pattufreefincal
  • Have a question? Subscribe to our newsletter using the form below.
  • Hit 'reply' to any email from us! We do not offer personalized investment advice. We can write a detailed article without mentioning your name if you have a generic question.

Join over 32,000 readers and get free money management solutions delivered to your inbox! Subscribe to get posts via email!

About The Author

Pattabiraman editor freefincalDr M. Pattabiraman(PhD) is the founder, managing editor and primary author of freefincal. He is an associate professor at the Indian Institute of Technology, Madras. He has over ten years of experience publishing news analysis, research and financial product development. Connect with him via Twitter(X), Linkedin, or YouTube. Pattabiraman has co-authored three print books: (1) You can be rich too with goal-based investing (CNBC TV18) for DIY investors. (2) Gamechanger for young earners. (3) Chinchu Gets a Superpower! for kids. He has also written seven other free e-books on various money management topics. He is a patron and co-founder of “Fee-only India,” an organisation promoting unbiased, commission-free investment advice.
Our flagship course! Learn to manage your portfolio like a pro to achieve your goals regardless of market conditions! More than 3,000 investors and advisors are part of our exclusive community! Get clarity on how to plan for your goals and achieve the necessary corpus no matter the market condition is!! Watch the first lecture for free!  One-time payment! No recurring fees! Life-long access to videos! Reduce fear, uncertainty and doubt while investing! Learn how to plan for your goals before and after retirement with confidence.
Our new course!  Increase your income by getting people to pay for your skills! More than 700 salaried employees, entrepreneurs and financial advisors are part of our exclusive community! Learn how to get people to pay for your skills! Whether you are a professional or small business owner who wants more clients via online visibility or a salaried person wanting a side income or passive income, we will show you how to achieve this by showcasing your skills and building a community that trusts and pays you! (watch 1st lecture for free). One-time payment! No recurring fees! Life-long access to videos!   
Our new book for kids: “Chinchu Gets a Superpower!” is now available!
Both boy and girl version covers of Chinchu gets a superpower
Both the boy and girl-version covers of "Chinchu Gets a superpower".
Most investor problems can be traced to a lack of informed decision-making. We made bad decisions and money mistakes when we started earning and spent years undoing these mistakes. Why should our children go through the same pain? What is this book about? As parents, what would it be if we had to groom one ability in our children that is key not only to money management and investing but to any aspect of life? My answer: Sound Decision Making. So, in this book, we meet Chinchu, who is about to turn 10. What he wants for his birthday and how his parents plan for it, as well as teaching him several key ideas of decision-making and money management, is the narrative. What readers say!
Feedback from a young reader after reading Chinchu gets a Superpower (small version)
Feedback from a young reader after reading Chinchu gets a Superpower!
Must-read book even for adults! This is something that every parent should teach their kids right from their young age. The importance of money management and decision making based on their wants and needs. Very nicely written in simple terms. - Arun.
Buy the book: Chinchu gets a superpower for your child!
How to profit from content writing: Our new ebook is for those interested in getting side income via content writing. It is available at a 50% discount for Rs. 500 only!
Do you want to check if the market is overvalued or undervalued? Use our market valuation tool (it will work with any index!), or get the Tactical Buy/Sell timing tool!
We publish monthly mutual fund screeners and momentum, low-volatility stock screeners.
About freefincal & its content policy. Freefincal is a News Media Organization dedicated to providing original analysis, reports, reviews and insights on mutual funds, stocks, investing, retirement and personal finance developments. We do so without conflict of interest and bias. Follow us on Google News. Freefincal serves more than three million readers a year (5 million page views) with articles based only on factual information and detailed analysis by its authors. All statements made will be verified with credible and knowledgeable sources before publication. Freefincal does not publish paid articles, promotions, PR, satire or opinions without data. All opinions will be inferences backed by verifiable, reproducible evidence/data. Contact information: letters {at} freefincal {dot} com (sponsored posts or paid collaborations will not be entertained)
Connect with us on social media
Our publications

You Can Be Rich Too with Goal-Based Investing

You can be rich too with goal based investingPublished by CNBC TV18, this book is meant to help you ask the right questions and seek the correct answers, and since it comes with nine online calculators, you can also create custom solutions for your lifestyle! Get it now.
Gamechanger: Forget Startups, Join Corporate & Still Live the Rich Life You Want Gamechanger: Forget Start-ups, Join Corporate and Still Live the Rich Life you wantThis book is meant for young earners to get their basics right from day one! It will also help you travel to exotic places at a low cost! Get it or gift it to a young earner.

Your Ultimate Guide to Travel

Travel-Training-Kit-Cover-new This is an in-depth dive into vacation planning, finding cheap flights, budget accommodation, what to do when travelling, and how travelling slowly is better financially and psychologically, with links to the web pages and hand-holding at every step. Get the pdf for Rs 300 (instant download)