Mirae India Equity Fund to become Mirae Large Cap Fund: Time to Exit?

Last Updated on

In a move that caught investors (like me) by surprise, Mirae Asset announced that with effect from 1st May 2019, Mirae India Equity Fund (a multi-cap fund) will become a large cap fund. In this article, I discuss the performance of this fund and what old and relatively new investors in this fund should do. If you have not yet started investments in this fund but were only considering it, then you should look for a different multi-cap fund and forget about this.

The move is surprising as it comes only about a year ago from the SEBI recategorization period when many AMCs changed fund attributes and Mirae emerging bluechip became a large and mid cap fund from a mid cap(ish) fund. Mirae’s CEO, Swarup Mohanty spent a good part of last evening trying to justify the change and confident about the fund’s future performance (what else can he say anyway?!)

Mirae India Equity Fund to become Mirae Large Cap Fund: Time to Exit?

Reasons for the change to Mirae Large Cap Fund?

His basic arguments were (1) the fund was managed as a large cap fund for the last four years, (2) the fund will continue to hold 15-18% mid caps (as per SEBI rules), (3) the growing AUM was one factor for the change, (4) existing investors had to be protected (against what?!)

You do not officially classify a fund as ” Multi-Cap Fund – An open-ended equity scheme investing across large cap, mid cap, small cap stocks” and tell investors not to get upset because the last four years the fund was a large cap in nature. This essentially seems to imply that it was not a strategic decision where the fund manager has exercised its right to invest across sectors.

Not convincing enough

This excuse seems to suggest these SEBI classifications are merely theoretical labels. Suppose I wanted to buy this fund last week. If I had read the scheme document, the key memorandum information, the product one-pager, the classification by the AMC and by rating portals, I would have got the impression that it is a multi-cap fund. So if I look at the portfolio and see large cap predominantly, I can conclude that it is a large capish mutli-cap fund. Now the CEO is saying, hey, don’t worry, we operated it as a large cap fund for the last four years, so just tell yourself it is one and keep the faith with us.

Excuse me, but there is, or at least there ought to be a big difference between a fund that is large capish by choice and large capish by mandate. Of course, Mirae has every right to change its mandate but it got the timing completely wrong. Had it done this a year back, no one would have complained. This is frustrating because many investors had to re-jig their folios due to changes in other funds and things have just settled down.

By the way, all large cap funds have up to 18% room to accommodate mid and small caps, not just this fund. How else can they claim victory over the Nifty?!  In any case, I fail to see how this will protect existing investors as we shall see below.

Investors who wish to exit, do so without any load during the month of April

Change in benchmark

Mirae Large cap fund will use Nifty 100 TRI (total returns index, where dividends are reinvested) instead of BSE 200 TRI. This is not a big deal as the returns are not too different.

Rolling Returns and Risk over 5 years

If we consider the performance of the fund over every possible 5 year period in the past, it has done quite well against both old and new benchmarks in terms of returns. The volatilty seems to have increased in the recent past.

MIrae India Equity Fund: Rolling Returns and Risk over 5 years

Had this been a multi-cap fund (at least on paper), I would have imagined the fund manager will increase mid caps when the time is right and leave things at that. However, under the present circumstances, we need to dig deeper.

Rolling Returns and Risk over 2 years

Notice how the performance has dipped during the period when the fund held more of large caps. It has behaved as any old large cap fund would. Now that I know the fund cannot reduce large cap allocation, this make a big difference.

MIrae India Equity Fund: Rolling Returns and Risk over 2 years

A closer look over 2 and 3 years

If we zoom in over 2 and 3 years, it is easier to see the decrease in outperformance.

MIrae India Equity Fund: Rolling Returns and Risk over 2 and 3 years (zoomed in view)

Rolling risk over 3 years is worrying

Okay, the fund behaved like a large cap fund recently and this is evident from the returns. However, I still expect the fund manager to maintain lower volatility than Nifty 100 and that has not occurred in the recent past. This is quite unimpressive to say the least.

Will Mirae Large Cap Fund Work?

From what we see above, it will work like any old large cap fund, yes. I see nothing special about it and will certainly not expect anything in future.

I just started investing in this fund: Should I stop/exit?

If you have another large cap fund in your portfolio then decide which you want to retain first. Then invest in that and get rid of the other keeping tax and exit loads in mind. If you are a young investor with goals several years away, you may want to consider a shift from large cap to index funds. You can Combine Nifty & Nifty Next 50 funds to create large, mid cap index portfolios

I am an investor for a few years now: Should I stop/exit?

If you have a large allocation in this fund, then you can consider my situation below and adapt it suitably. If you have a small allocation, then keep it small. Do not make fresh investments and watch the performance for some time

My situation

I started investments in this fund around Dec. 2015 and currently, 38.5% of my son’s equity allocation (63%) is in this fund and the current XIRR is about 14% although it was much lower a couple of months back.  My other holdings for this goal are HDFC Prudence and ICICI Dynamic (multi-asset). I have not made fresh investments in the Mirae fund since Sep 2018 as I wanted to increase exposure in the ICICI Fund. I shall continue to do so.

Going forward, I shall treat Mirae Large Cap Fund as the primary large cap fund in the portfolio (not because of past performance, but more because of size and my inertia) as long the performance is reasonable. When the portfolio becomes big it is not easy to suddenly change funds. It is mentally tiring! Also, these AMCS keep making these annoying changes and I am simply too old and tired to react to each change. From a goal based perspective, it does not hurt to hold on to this fund so I will but will not be investing anything further for at least a year or more. I will then look at performance and then take a call.

Kindly keep in mind that I am okay with a large cap-ish portfolio. My son’s education goal is essentially done. So my focus is on risk management and not aggressive returns. So you cannot simply do what I do but must evaluate your position carefully. Even though I will hold current units, I certainly will not expect past performance going forward. I also do not think that 14% mentioned above came purely from a large cap-like portfolio.

Video Version

Mirae India Equity Fund to become Mirae Large Cap Fund: Time to Exit?

What are you going to do? Do Share below

Download the Nifty 100 Momentum, Low Volatility Stock Screener for March 2019

Do share if you found this useful

Create a "from start to finish" financial plan with this unique open-source robo advisory software template


 Don't like ads but want to support the site? Subscribe to the ad-free newsletter! 
You will get the full post-ad-free delivered to your inbox for Rs. 3000 a year. Follow this link to read the terms and sign up! 


About the Author M Pattabiraman author of freefincal.comM. Pattabiraman is the co-author of two books: You can be rich too with goal based investing and Gamechanger. “Pattu” as he is popularly known, publishes unbiased, promotion-free research, analysis and holistic money management advice. Freefincal serves more than one million readers a year with numbers based analysis on topical issues and has more than a 100 free calculators on different aspects of insurance and investment analysis, including a robo advisory template for use by beginners. Contact information: freefincal {at} Gmail {dot} com He conducts free money management sessions for corporates (see details below). Previous engagements include World Bank, RBI, BHEL, Asian Paints.

Content Policy

Freefincal has original unbiased, conflict-of-interest-free,  topical reports, reviews, commentary and analysis on all aspects of personal finance like mutual funds, stocks, insurance etc. All guest authors and contributors to the site also do not have any conflict of interest. If you find the content useful, please consider supporting us by (1) sharing our articles and (2) disabling ad-blockers for our site if you are using one. No promotional content We do not accept sponsored posts and link exchange requests from content writers and agencies. This is our privacy policy Our website is non-profit in nature. The revenue from the advertisement will only be used for hosting charges, domain registration charges, specific plugins necessary for traffic growth and analytics services for search engine optimisation.
Want to conduct a sales-free "basics of money management" session in your office?
I conduct free seminars to employees or societies. Only the very basics and getting-started steps are discussed (no scary math):For example: How to define financial goals, how to save tax with a clear goal in mind; How to use a credit card for maximum benefit; When to buy a house; How to start investing; where to invest; how to invest for and after retirement etc. depending on the audience. If you are interested, you can contact me: freefincal [at] Gmail [dot] com. I can do the talk via conferencing software, so there is no cost for your company. If you want me to travel, you need to cover my airfare (I live in Chennai)

Connect with us on social media


Do check out my books


You Can Be Rich Too with Goal-Based Investing

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

The ultimate guide to travel by Pranav Surya

Travel-Training-Kit-Cover This is a deep dive analysis into vacation planning, finding cheap flights, budget accommodation, what to do when travelling, how travelling slowly is better financially and psychologically with links to the web pages and hand-holding at every step.  Get the pdf for ₹199 (instant download)

Free Apps for your Android Phone

All calculators from our book, “You can be Rich Too” are now available on Google Play!
Install Financial Freedom App! (Google Play Store)
Install Freefincal Retirement Planner App! (Google Play Store)
Find out if you have enough to say "FU" to your employer (Google Play Store)

Blog Comment Policy

Your thoughts are vital to the health of this blog and are the driving force behind the analysis and calculators that you see here. We welcome criticism and differing opinions. I will do my very best to respond to all comments asap. Please do not include hyperlinks or email ids in the comment body. Such comments will be moderated and I reserve the right to delete the entire comment or remove the links before approving them.

15 Comments

  1. Really this announcement was a big surprise. From not having any restrictions to putting yourself in a cage of largecap was not needed for mirae AMC.

    I had 2 multicaps in my portfolio.
    This fund and ppfas fund. I think it’s better to replace this with another.
    Not sure which one. Any suggestions?

    I hope they move mirae emerging fund to multicap as it is almost acting like one already.

  2. Sir I have an ongoing SIP in this Fund since last 2 years. Should I exit or switch to Mirae Emerging Bluechip ? please advise.

  3. Hi sir..

    It is nice you have updated on this very fast which will help a lot..

    But what would be alternative option for multi cap fund at the place of it for new investor whose doesn’t have any multi cap in portfolio ..

  4. I switched from ICICI BlueChip to Mirae Asset India Equity fund as I wanted to have multi-cap instead of going largecap. Now, if Mirae Asset India Equity fund is also going to be largecap, I will switch to Parag Parikh Long Term Equity Fund.
    Thanks for informing that there will be no exit load in the month of April, however I will have to check capital gains

  5. I believe Mirae is positioning themselves to start a new Multicap fund after the month of May. Basically their fund stable is relatively small compared to other fund houses. They are adding new funds in the past few months. In current situation there will not be many takers for a new Largecap fund. So they are simply converting India Equity to a largecap fund since not many will withdraw (its a 10,000 crore fund). Introducing a new Multicap fund will not only attract new investors but if anyone wants to switch from India equity to the new fund, the money will stay with Mirae which is a win-win for them.
    I see this play out in next 3-4 months.
    I am very very disappointed with their decision though.

  6. Even my wife was investing in this one though I told her to stop the SIP N Hold it for long term.. I have mosl multicap 35 and seems to be worth a look. Has delivered good returns so far.

  7. I had invested 50 k in mirae equity fund in Aug 2018, taking it to be a multicapper. I was about to invest another 50 on the 29th March but now would not. I already have Axis blue Chip so don’t need another active large fund. Thanks.

  8. I was very impressive of your channel and i want to talk with you if you give me appointment and your phone number sir.
    I request for you to do the videos on education system (i what path we should go up to tenth class for our child who are confused about some schools like narayan and sri chitanay in AP state)

  9. Nice to read such an informed and detailed article on this fund. I had recently started a SIP in this fund. Now that it’s going to change to become a large cap one, I’ll be shifting to Edelweiss multicap find direct growth plan.
    Reason:- 1. Expense ratio of 0.67% as compared to 0.96% of Mirae asset India equity fund.
    2. 4 star rating in morningStar India in multicap category.
    3. Decent returns of close to 17% in past.
    4. And I already hold a large cap fund in my portfolio. So would like to go for a better suited multicap find.

  10. You always put good content and i alwys try nobto skip any of these….Keep it up and thanks for all your guidance for people like me

  11. Sir my multicap fund has switched to Large Cap starting May 1st.
    What is a good alternative ….

    ICICI PRU MULTICAP
    Vs
    AXIS Multicap
    Vs
    ABSL Equity fund
    ????

    Cant decide !
    Though Axis has the best performance but it is a relatively new fund
    Motilal Oswal multicap 35
    &
    Kotak standard multicap has been overlooked due to poor performance and large AUM ……

    What’s your take ????

  12. Mirae will be launching a focussed 30 multicap fund in coming weeks. Details seem to be submitted to SEBI already.
    Stocks in portfolio will span across large-mid-small cap. Considering their overall performance, this new fund also might do well.
    Need to wait for more details though.

  13. If only I had read your blog timely. I transacted a big lumpsum on Mar 30 🙁 So no exit load option doesn’t apply to my case. I did not have large cap fund in my portfolio so I will keep it for now. But its frustrating as young investor reading through scheme document and choosing it for multi-cap fund.

Leave a Reply

Your email address will not be published. Required fields are marked *