In this edition of the “fund performance report”, we look at Mirae Asset Hybrid Equity Fund. Launched in July 2015, the fund has an AUM of about Rs. 6,400 Crores. We shall compare the reward and risk performance consistency of the fund with respect to Nifty 100 TRI and CRISIL 65:35 Aggressive Index.
Disclaimer: Fund performance reports present return and risk analysis of a fund with representative benchmarks and not investment recommendations. It must be expressly understood that the data below reflect only past performance and is in no way an indication of future performance. Our investment recommendations can be found here: Handpicked List of Mutual Funds (PlumbLine).
The asset allocation history of the fund shows that it is fairly stable as is the case for aggressive hybrid funds.
The equity portion of the fund is large cap heavy with a small mid cap contribution and an even smaller small cap weight.
The fund has fascinated direct plan fans with a low total expense ratio. However, it must be understood that low fee is a classic asset gathering baiting technique and will not last.
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We will use three metrics to analyze performance consistency compared to the Nifty 100 TRI and CRISIL 65:35 Aggressive Index. Analysis such as this can be found for 350+ equity funds in our monthly mutual fund screener.
1 Rolling return outperformance consistency: the fund returns are compared with category benchmark returns over every possible 3Y,4Y, 5Y period. Higher the outperformance consistency, the better. Suppose 876 fund returns were compared with 876 benchmark returns, and the fund has beaten the benchmark 675 times. The consistency score will be 675/876 ~ 77%.
Three Years
| Metric | Crisil6535 | Nifty 100 TRI |
| No of rolling return entries Index (3 Years) | 886 | 886 |
| No of rolling return entries Fund (3 years) | 886 | 886 |
| No of times fund has outperformed the index (3 years) | 884 | 796 |
| rolling return outperformance Consistency Score (3 years) | 100% | 90% |
Four years
| Metric | Crisil6535 | Nifty 100 TRI |
| No of rolling return entries Index (4 Years) | 639 | 639 |
| No of rolling return entries Fund (4 years) | 639 | 639 |
| No of times fund has outperformed the index (4 years) | 639 | 552 |
| rolling return outperformance Consistency Score (4 years) | 100% | 86% |
Five years
| Metric | Crisil6535 | Nifty 100 TRI |
| No of rolling return entries Index (5 Years) | 392 | 392 |
| No of rolling return entries Fund (5 years) | 392 | 392 |
| No of times fund has outperformed the index (5 years) | 392 | 303 |
| rolling return outperformance Consistency Score (5 years) | 100% | 77% |
That is indeed reasonably good outperformance consistency with respect to both benchmarks.
2 Upside performance consistency over every possible 3Y,4Y, 5Y: Higher the better. A score of 70% means, 7 out of 10 times, the fund performed better than the category benchmark when the benchmark was moving up. This is a measure of reward. It is computed from rolling upside capture data (see link below).
| Metric | Crisil6535 | Nifty 100 TRI |
| upside performance consistency (3 years) | 89% | 67% |
| upside performance consistency (4 years) | 100% | 76% |
| upside performance consistency (5 years) | 95% | 67% |
This is a rare fund that does better than the index when the index moves up. We say rare because most funds do not exhibit consistent upside capture > 100% (higher returns than the benchmark’s positive monthly return). See for example: Strange, but true! How mutual funds beat the index!
3 Downside performance consistency over every possible 3Y,4Y, 5Y. Higher, the better. A score of 60% means, 6 out of 10 times, the fund performed better than the category benchmark when the benchmark was moving down. This is a measure of risk protection. It is computed from rolling downside capture data. Read more: An introduction to Downside and Upside Capture Ratios.
| Metric | Crisil6535 | Nifty 100 TRI |
| downside protection consistency (3 years) | 47% | 100% |
| downside protection consistency (4 years) | 27% | 100% |
| downside protection consistency (5 years) | 24% | 100% |
Typically an upside performer does not do well when the benchmark falls. Mirae Asset Equity Hybrid Fund is not an exception. The data wrt Nifty 100 should be considered in context. The bond exposure will automatically provide the downside performance. No fund manager skill is needed here.
Trailing returns and volatility
These are the returns and volatility as of 4th March 2021. Source: Equity Mutual Fund Screener Mar 2022.
If you look at the entries in red, they show us that the fund is more volatile than the Crisil 65;35 index (the fund will always have lower volatility than Nifty 100 because of the bond exposure).
However, this higher volatility has resulted in better returns than both indices (green entires)
| Metric | Crisil6535 | Nifty 100 TRI |
| Trailing Benchmark Return 1Y | 8.49% | 9.42% |
| Trailing Fund Return 1Y | 9.39% | 9.39% |
| Index STDEV 1Y | 2.52% | 3.96% |
| Fund STDEV 1Y | 3.24% | 3.24% |
| Trailing Benchmark Return 2Y | 18.08% | 21.74% |
| Trailing Fund Return 2Y | 19.46% | 19.46% |
| index STDEV 2Y | 5.25% | 7.79% |
| STDEV 2Y | 5.97% | 5.97% |
| Trailing Benchmark Return 3Y | 14.30% | 15.14% |
| Trailing Fund Return 3Y | 15.31% | 15.31% |
| Index STDEV 3Y | 4.53% | 6.79% |
| STDEV 3Y | 5.17% | 5.17% |
| Trailing Benchmark Return 4Y | 12.09% | 12.72% |
| Trailing Fund Return 4Y | 13.29% | 13.29% |
| Index STDEV 4Y | 4.05% | 6.05% |
| STDEV 4Y | 4.58% | 4.59% |
| Trailing Benchmark Return 5Y | 12.73% | 14.36% |
| Trailing Fund Return 5Y | 14.42% | 14.42% |
| Index STDEV 5Y | 3.72% | 5.56% |
| STDEV 5Y | 4.22% | 4.23% |
In summary, Mirae Asset Hybrid Equity Fund has an excellent track record of outperformance in its short history. This outperformance has come by taking on more risk than the aggressive hybrid benchmark and has so far worked for the fund manager and investors. While no one can predict future performance, investors who do not mind taking on a little extra volatility in the hope of outperformance can consider this fund.
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