This is a review of Mirae Emerging Bluechip Fund and a discussion on why new investors should not consider this fund. This started out as a midcap fund but became a large and midcap fund because of an increase in AUM. They then made this official due to SEBI mutual fund categorization rules.
Mirae Emerging Bluechip Fund: Current nature & asset allocation (since Mar 14th 2018)
Mirae Emerging Bluechip Fund is currently positioned as a “Large & Mid Cap Fund – An open-ended equity scheme investing in both large cap and mid cap stocks”. Souce: Mirae AMC. It can invest 35-65% of large cap stocks and 35-65% of mid cap stocks and the rest in bonds. It is currently benchmarked to NIFTY Large Midcap 250 Index. This is a significant change from its previous asset allocation.
Old nature & asset allocation
Earlier Mirae Emerging Bluechip Fund could invest 65-100% in non-large cap stocks (other than top 100 by market capitalization) and the benchmark was Nifty Free Float Midcap 100 Index.
Value Research did not remove its star rating for this fund probably because it was leady behaving like a large and mid cap fund prior to the offical Mar 2018 change. There is one more development which is disturbing.
Suspension of lump sum investments
From October 25th 2016 onwards, lump sum investments into this fund has been suspended. At that time it was “okay” as the market was overheated and the move as thought as protective of existing investors. What is disturbing and baffling is that even after the fund had changed character the suspension has not been lifted!
What is so special in this fund that lump sums should be kept away when other mid cap funds with comparable AUM (excluding the outlier HDFC Mid cap opportunity fund – click to read review) allow lump sum investing? Prathamesh Ambdoskar made an insightful comment on Youtube (link below)
One observation: Mirae asset tax saver, Mirae asset India equity and this fund have approx 70% overlap now
Mirae Emerging Bluechip Fund: Performance Review
The first thing to keep in mind when you visit portals like Value Research is that they are showing the past performance of this fund with respect to its current benchmark NIFTY Large Midcap 250 Index. As it was a mid cap fund for much of its past, this comparison is incorrect.
However, this fund has struggled against even this benchmark for almost two years now (screenshot from Value Research)
I think this fund has chosen a rather difficult benchmark = 50% large caps + 50% mid caps and will probably struggle in future. It should have probably used easier benchmarks like NSE or BSE 200.
If one looks at the past 3 year rolling returns data, it has beat its peers in terms of risk and reward. However this was a mid cap fund.This comparison will not be much use in selecting the fund
Although Mirae Emerging Bluechip Fund has had an impressive past, its change in nature and suspension of lump sum investing do not place it in positive light. Therefore I cannot bring myself to recommend it to new investors.
Existing investors: If you are happy with returns, stay put but keep an eye on performance wrt benchmark. Exit if it slips. Also do check if the large cap to mid cap ratio in your portfolio is as per the desired level.
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