Review: Mirae Asset Hybrid Equity Fund

This is a return vs risk performance review of  Mirae Asset Hybrid Equity Fund (previously known as Mirae Asset Prudence Fund) vs Nifty 100 Equal weight Index. Although looking for consistent performance track record while choosing a mutual fund is the logical and natural way to about things, sometimes you may choose to go with your gut instinct (which is how I choose PPFAS). Mirae Asset Hybrid Equity Fund was a fund that I had recommended in one of Bangalore DIY investor meets when it was less than a year old or so.

The reasons were simple. Mirae was relatively a new player with two impressive funds (which continue to do well): Mirae Asset Emerging Bluechip Fund and Mirae Asset India Equity Fund. They do not have too many funds (even now) and I assumed that they will take the performance of a balanced or aggressive hybrid fund (as they are known now) seriously. The equity component of all three funds were (are) managed by the same fund manager (Neelesh Surana). Although I knew nothing about his style (other than the vague statements made in the scheme document),  Mirae Asset Hybrid Equity had a large-cap preference but does have the freedom to invest across sectors and market cap. So it seemed like a balanced version of their large-cap fund: Mirae Asset India Equity Fund. You should typically find significant overlap between these two funds.

Using the  tool to compare equity mutual fund portfolios, we get:

Overlap of Mirae Asset Hybrid Equity Fund with other fundsSo please do not add this fund if you already hold either of the two funds.

Perhaps the most important reason was the chance to invest in a new balanced fund with less attention (AUM). Sometimes you got to roll the dice. As as you know how to review performance, it should be fine. Mirae Asset Hybrid Equity Fund has just completed three years in June 2018. Let us find out how it has fared in this short period.

Mirae Asset Hybrid Equity Fund - Performanace Review

Mirae Asset Hybrid Equity Fund: Performance analysis

The fund uses the standard aggressive hybrid benchmark: CRISIL Hybrid 35+65 Aggressive. However, I prefer to use the Nifty 100 Equal Weight Index. The reason is that I expect an aggressive hybrid index to offer a return close to an equity index with lower risk. This is the only way the expense ratio can be justified IMO. By the way, the Direct plan for this fund has an expense ratio of only 0.97% which is pretty awesome for a ~ 1300 Crore AUM. Update: the total expense ratio has been further reduced to 0.36%

Since Nifty 100 Equal Weight Index has a similar performance to the Nifty Blend Index (a homemade mix of 50% Nifty 50+ 50% Nifty Next 50), we are also comparing the performance of this fund with the blend. We start with the rolling return and risk over one year.

Mirae Asset Hybrid Equity Fund versus NIfty 100 Equal Weight Index

The fund outperformed N100EW 306 out of 555 times and that is more than decent for a hybrid fund. Again a lesson to those who foolishly assume 100% equity exposure is better than 75% exposure. The risk as seen in the bottom graph is also reasonably low. Over two years, the fund beat the index, 267/307 times and over three years, 39 out of 64 times. Again all decent IMO.

Note: If you use the Mutual Fund Analyzer: Fund A vs. Fund B and compare Mirae Hybrid vs Mira India Equity fund, you will notice that the Hybrid fund underperforms a little bit but with lower risk. So again, this is a fair deal.

Video version:

Who should invest in Mirae Asset Hybrid Equity Fund?

So now that we see that performance with an equity index is reasonable with lowe risk, you certainly can consider investing in this fund although it does not have enough performance history under its belt. However, invest only if

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4 thoughts on “Review: Mirae Asset Hybrid Equity Fund

  1. Amazing post. I also spotted the similarity between Mirea Hybrid fund and it’s other two flagship funds. Since, I am already invested in Mirae India Equity (The multi cap fund), I invested in Principal Hybrid in the Hybrid category. How good is the fund as per your analysis? I am a bit worried after the principal liquid fund made a default? Please suggest.

  2. You have compared the above fund with PRINCIPAL NIFTY 100 EQUAL WEIGHT FUND… you mentioned the Mirae fund performed better than Principal nifty 100 eq weight …. in one of your posts, you suggested, one can invest in Principal nifty 100 eq fund …. I start investing in principal nifty 100 eq weight…. also ICICI nifity next 50 & quantum long term eq … you suggest to hold 2 or 3 funds in a portfolio..but you go on suggesting one new fund every week…. what investor should do when one read your analysis

    1. 1: “PRINCIPAL NIFTY 100 EQUAL WEIGHT FUND” is not mentioned in this post.
      2: “what investor should do when one read your analysis” think for himself and then decide!

  3. …. I read your post previously appeared Now i recollected …
    “Do not look at the funds! Look within yourself! Define your need clearly and the answers will be easy. Once you list your goals, use the Freefincal Robo Advisory Software Template. It will give you a start-to-finish financial plan along with the list of products to invest in PlumbLine” Continue your journey… Subha

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