Last Updated on December 29, 2021 at 5:15 pm
Mirae Asset Large Cap Fund is an open-ended equity scheme that will invest 80% of its assets across large cap stocks with some exposure to mid cap stocks with the flexibility to invest across sectors and themes. Launched in April 2008, the fund has changed nature twice. In this performance review, we find out if it makes sense to buy (or hold onto) this scheme or is it better to switch to large cap index funds.
From inception to Feb 2018, the fund was called Mirae Asset India Opportunities Fund and had considerable freedom to invest across market caps. To comply with SEBI categorization rules, the fund was renamed as Mirae Asset India Equity Fund as labelled a multicap fund.
Then a little more than a year later, the AMC announced from 1st May 2019, the fund was renamed and recategorised as Mirae Asset Large Cap Fund with a benchmark change from BSE 200 to Nifty 100.
🔥Secure your future with our Robo-advisory tool trusted by over 3,500 investors and advisors. From effortless retirement planning to funding your children’s biggest dreams, turn your financial goals into reality. 🔥
Subscribe for money management solutions via email! (Link takes you to our email sign-up form) Join 32,000+ readers in our community.
👉 New Tool Alert! NaviPlan: A Privacy-Focused Multi-asset Tracker and Goal Planner 👈
Market Cap Allocation
There seems to be a general perception that this fund always had a large-cap tilt and these changes will not matter much. This is incorrect. As per the AMC’s product update dated July 2019, the fund held a significant portion of mid cap stocks around 2016.
Mirae Asset Large Cap Fund vs NIfty 100
The since inception NAV growth and comparison with its current benchmark, Nifty 100 may look impressive, but a closer look would paint a different picture.
From Aug 2016, the fund has managed to keep its nose above Nifty 100.
However, one year forward, things look quite different. The fund has failed to beat Nifty 100 since at least Aug 2017.
This essentially means the “outperformance” that older investors enjoy today were already obtained more than two years ago and nothing has been added to it. This is a case of too many things happening too soon. Before we take stock, let us complete the performance comparison with a rolling-return and risk study.
Rolling Returns and Rolling Risk
If we consider every possible five-year return windows in the past, the fund has done well.
The volatility over these five-year windows has become comparable to Nifty 100 indicating the shift towards large cap stocks. In this case, how much the monthly returns deviate from the five-year average monthly returns is calculated. This is known as the standard deviation.
Over every possible three-year windows, the decrease in performance is evident.
Over these 3-year windows, the increase in volatility is also clearly seen.
Expense Ratio History
Mirae has kept the TER of the direct plan invitingly low but could increase if there is a sharp rise in AUM. See: Why SEBI should stop frequent mutual fund expense ratio changes
Can we buy Mirae Asset Large Cap Fund or switch to index funds?
Arguments in favour of holding (for existing investors): The large cap space since Jan 2018 has been dominated by a few stocks. Almost all funds that do not hold enough of these stocks have underperformed. So the fund needs to be given time.
Arguments in favour of switching to index funds: Mirae Large Cap beat NIfty 100 only when it had significant exposure to mid cap stocks. With a mandate to hold 80% of the Nifty 100 universe, it would find it tough going forward to beat this index. In fact, the lack of performance in the actively managed large cap spaces dates long before the SEBI categorization rules came into play: This will change the way you invest: S&P Index Versus Active Funds report and Only Five Large Cap funds have comfortably beat Nifty 100!
While the fund can be given time by new investors on the sidelines, existing investors need not be patient for long. They are better off moving to large cap index funds. If they wish to wait, then they can keep an eye on the NIfty 100 Equal Weight Index. If the return divergence between this and the NIfty 100 reduces, active large cap funds better performing well. Else it is decidedly time to move on. More on this later.
Join 32,000+ readers and get free money management solutions delivered to your inbox! Subscribe to get posts via email! (Link takes you to our email sign-up form)
Use our Robo-advisory Tool to create a complete financial plan! More than 3,000 investors and advisors use this! Use the discount code robo25 for 20% off. Plan your retirement (early, normal, before, and after), plus non-recurring financial goals (such as child education) and recurring financial goals (such as holidays and appliance purchases). The tool helps anyone aged 18 to 80 plan for retirement, plus six non-recurring and four recurring financial goals, with a detailed cash flow summary.
🔥Join our community of 9000+ users! 🔥Avail massive discounts on our courses + freefincal investor circle!
Track your mutual funds and stock investments with our Google Sheet!
We also publish monthly equity mutual funds, debt and hybrid mutual funds, index funds, ETF screeners, as well as momentum and low-volatility stock screeners.
You can follow our articles on Google News
We have over 1,000 videos on YouTube!
Podcast: Let's Get RICH With PATTU! Every single Indian CAN grow their wealth!
You can watch podcast episodes on the OfSpin Media Friends YouTube Channel
- 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 personalised investment advice. We can write a detailed article without mentioning your name if you have a generic question.
About The Author
Dr 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 14 years of experience publishing news analysis, research and financial product development.
Connect with him via Twitter(X) LinkedIn YouTube
Our flagship course! Learn to manage your portfolio like a pro to achieve your goals regardless of market conditions! More than 3,500 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 conditions! Watch the first lecture for free! One-time payment! No recurring fees! Lifelong access to videos! Reduce fear, uncertainty and doubt while investing! Learn how to plan for your goals before and after retirement with confidence.
Increase your income by getting people to pay for your skills! More than 900 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 seeking more clients through online visibility, or a salaried individual looking for side or passive income, we will show you how to do it by showcasing your skills and building a community that trusts and pays you. (Watch the 1st lecture for free). One-time payment! No recurring fees! Lifelong access to videos!
Our book for kids: “Chinchu Gets a Superpower!” is now available!
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 a side income via content writing. It is available at a 50% discount for Rs. 500 only!
We publish monthly mutual fund screeners and momentum, low-volatility stock screeners.
About freefincal & its content policy
Freefincal is a News Media organisation 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: To get in touch, please use our contact form. (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
Gamechanger: Forget Startups, Join Corporate & Still Live the Rich Life You Want
Your Ultimate Guide to Travel
