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Fund Analysis: Mirae Asset India Opportunities Fund
Tue, Mar 08, 2016
Source : Khyati Shah, Citrus Interactive

Mirae Asset India Opportunities Fund is a large cap equity diversified fund that aims to generate long term capital appreciation by capitalizing on potential investment opportunities through predominantly investing in equities, equity related securitieswith flexibility across sectors, market caps, themes and styles.The fund was launched in April 2008 and is benchmarked against the S&P BSE 200 index. The fund has an AUM of Rs. 1,455.97 crore as on January 31, 2016 which has gone up by Rs. 519 crore as compared to last year January 31, 2015 (Rs. 937 crore).

 

Performance:

Mirae Asset India Opportunities Fundhas a very good performance track record of consistently outperforming its benchmark index (except in the last 6 months) and the equity diversified category average across all time frames as shown from the table given below. Since inception it has outperformed its benchmark by 8.15 percentage points. It has been in second quartile of its peer-set across all time frames as shown in the table given below.

Scheme Name

6 Months

1 Year

3 Years

5 Years

Since Inception

Mirae Asset India Opportunities Fund

-13.29

-15.09

16.4

12.77

13.86

S&P BSE 200 Index

-12.52

-19.07

8.48

6.15

5.72

Category Average

-13.58

-16.06

15.06

11.19

NA

Rank

69/161

54/158

50/146

44/137

NA

Figures are in % as on February 29, 2016; Returns above 1-year in Compounded Annual Growth Rate (CAGR)

When we look at the calendar year returns it’s quite clear that this fund has beaten its benchmark in all the last five calendar years. It has beaten its category average in the year 2011, 2013 and 2015 but it has underperformed marginally in the year 2012 and 2014.

Scheme Name

2011

2012

2013

2014

2015

Mirae Asset India Opportunities Fund

-19.64

33.28

8.95

52.86

4.25

S&P BSE 200 Index

-26.95

30.98

4.38

35.47

-1.48

Category Average

-23.94

34.05

5.46

53.89

3.62

Rank

23/138

63/142

33/146

62/149

65/158

All figures in %

Risk: In terms of measures of risk such as standard deviation and beta (measured over last three years), the fund has taken higher risk compared to the category median.

 

Standard Deviation

Beta

Mirae Asset India Opportunities Fund

0.9

0.9

Category Median

0.88

0.86

Risk-adjusted Returns: In terms Treynor and Sharpe ratio (measured over last three years), the fund has provided higher risk-adjusted returns than the category median.

 

Treynor

Sharpe

Mirae Asset India Opportunities Fund

0.11

0.12

Category Median

0.1

0.11

 

Portfolio Characteristics:

Sector Concentration:  The fund’s concentration in the top 3 and 5 sectors is higher than the category median whereas the fund’s concentration in the top 10 sectors is lower than the category median.

 

Top 3

Top 5

Top 10

Mirae Asset India Opportunities Fund

40.88

52.03

65.65

Category Median

36.86

49.74

70.48

Company Concentration: The concentration of funds in top 3, 5 and 10 companies in its portfolio is lower than the category median highlighting lesser risk of the fund.

 

Top 3

Top 5

Top 10

Mirae Asset India Opportunities Fund

17.95

26.52

42.03

Category Median

19.54

28.34

44.93

Number of equity holdings: The fund currently holds 62 stocks in its portfolio (January 31, 2016), which is higher than the median stock count for the diversified-equity category, which currently stands at 45. Based on equity count the fund runs a diversified portfolio compared to its peer set. Over the past five years the fund has always had a diversified portfolio with the number of equity holdings over this period averaging 55.

Thus, based on criteria such as equity count, sector concentration and company concentration, one can conclude that the funds maintain a fairly diversified portfolio. 

Cash allocation: Its cash allocation at the end of January 2016 was 2.59 per cent. The average cash allocation for last five years is 3.24 per cent. Its maximum allocation to cash over last two years was 4.01 per cent in January 2015 and lowest was 1.10 per cent in November 2015. In 2015 it had an average cash allocation of 2.22 per cent.

Portfolio Insights: The top 5 sectors in the portfolio had an allocation of 52.03% which is higher than the category average of 48.60%. The top 5 sectors include Private sector Banks, IT – Software, Pharmaceuticals & Drugs, Refineries and Automobiles - Passenger Cars.

The fund’s exposure to cyclical stocks currently is 63.34% followed by Defensives with 17.58% and Services with 14.65%. The Top five holdings are HDFC Bank Ltd, Infosys Ltd., ICICI Bank Ltd., Reliance Industries Ltd. and Sun Pharmaceutical Industries Ltd.

In the last six months the fund has bought stocks of Max Financial Services Ltd., Torrent Power Ltd., Tata Motors Ltd., Max Ventures And Industries Ltd., Alkem Laboratories Ltd., Power Grid Corporation Of India Ltd., MothersonSumi Systems Ltd., Coromandel International Ltd., Hindustan Unilever Ltd. and Britannia Industries Ltd.

Stocks of Clearing Corporation of India Ltd., Welspun India Ltd., IRB Infrastructure Developers Ltd., Godfrey Phillips India Ltd.,Yes Bank Ltd., Hero MotoCorp Ltd. and Bank Of Barodahave been dropped from the portfolio.

 

Process:

Atleast 65% of the funds will be invested in equities & equity related instruments and upto 35% in Debt and Money Market instruments. The investment strategy of the scheme is such that the fund manager may not have any bias towards particular theme, sector, market cap or style in picking investment opportunities.The Scheme aims to maximize the long term capital appreciation by finding investment opportunities resulting from Indian economic growth and its structural shifts through investing in equities, equities related securities with risk mitigating and controlling measures.The fund manager broadly analyses the macro economy, industry trends and business cycles. He will invest in companies that benefit from macroeconomic, industry and sectoral trends (Top down Theme Overlay) after doing bottom up analysis and due diligence, quality of management in terms of corporate governance and commitment to minority shareholders etc.The fund managers are following strategy of Core & Tactical approach which means good stocks are held for a long time (core approach) and stocks are held for short-term to medium-term depending on market conditions (tactical approach). It follows the Early Cycle Investment Pattern which identifies future growth trends at an early stage. It has the flexibility to invest across sectors, market capitalization, themes and investment styles. The investment approach is centered on participating in high quality businesses upto a reasonable price.

The fund maintains a 70 to 75% allocation to large caps. Large caps are defined as the top 100 stocks by market capitalization.

The fund’s expense ratio is 2.42% which is much higher than the category average of 2.31%. The fund has an exit load of 2 per cent on or before 6 months (182 days), 1 per cent after 6 months but on or before 1 year from the date of investment and Nil after 1 year.  Minimum investment required for the fund is Rs. 5,000.

 

Fund Managers:

The fund managers responsible for the performance of this fund are Neelesh Surana and Sumit Agrawal.

Neelesh Surana is Head of Equity and Sr. Vice President at Mirae Asset Mutual Fund. He is a B.E (Mechinical) and M.B.A (Finance). He has professional experience of more than 14 years and is responsible for Portfolio construction & monitoring. Prior to this assignment, Neelesh was associated with ASK Investment Managers Pvt Ltd where he was responsible for tracking sectors like Metals, FMCG and Pharma. He manages several other funds such as Mirae Asset Emerging Bluechip Fund, Mirae Asset India-China Consumption Fund and Mirae Asset Prudence Fund. He has been managing Mirae Asset India Opportunities Fund since August 2014.

Sumit Agrawal is responsible for Overseas Investments. He is B.Com, CS, PGDM - (Finance). He has professional experience of more than 7 years and his primary responsibility includes Investment Analysis & Fund Management. He has been associated with the AMC as an Investment Analyst since November, 2010. He was previously associated with ENAM Securities and JP Morgan India Services as a Research Analyst.

 

View:

Mirae Asset India Opportunities Fund is one of the better performing funds in its category. The fund has outperformed of its benchmark convincingly in all the calendar years of its existence.The fund has the flexibility to identify opportunities across themes, sectors or market cap with a focused approach towards its investments. This fund can be considered for large cap allocation with an objective to beat the benchmark. Tactically, large caps are expected to do well in 2016 compared to their performance in 2015. Besides the fund’s performance, an experienced fund management team is also a point in the fund’s favour.

 

To read the previous Citrus Analysis of Mirae Asset India Opportunities Fund Click Here

 
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