Fund of Fortnight

This is our mutual fund recommendation. Every fortnight, we recommend one open-ended equity diversified fund that has the best potential of returns for the next one year considering its constituents remain the same. [EasyDNNnews:PaidContentStart]

Mirae Asset Large Cap Fund - Direct Plan

Reason for recommendation : There is lot of economic uncertainty globally due to geo-political tension as well as macroeconomic disturbances such as higher inflation. In fact, red hot inflation is making each investment decision a tricky one with the investing community undecided about whether they should opt for equity or fixed income. The broader markets are bearing the brunt even more and hence investing in Large-Cap funds make better sense, especially for those who can protect the downside fall better. In this large-cap space, we believe that Mirae Asset Large-Cap Fund is a prudent choice owing to its historical performance and credible track record. It has remained the best performing fund on a trailing basis in the last seven years. If we look at its calendar year returns, since 2014 this fund has never delivered negative returns. In fact, in all the years it has outperformed the category average and mostly beaten its benchmark except for the year 2020. Its regular plan, which has a longer history, shows that it has managed to protect the downside better. This is because even in its earlier avatar as a multi-cap fund, it had a strong bias towards large-caps. If we look at its risk-adjusted returns, it has one of the best of its kind as measured by Sharpe and Sortino ratios which stand at 0.58 and 0.62, respectively. It has even generated positive alpha despite the category average delivering negative alpha.

This fund’s top 10 stocks contributed 53 per cent to its overall assets while 55 per cent of the assets are covered by the top three sectors. Although this seems to be a bit concentrated, yet when compared to its benchmark index, it is still quite diversified. Looking at its asset allocation, around 85 per cent is towards large-caps while the remaining 13.44 per cent and 1.86 per cent have been allocated towards Mid-Caps and small-caps, respectively. The fund manager invests in companies that benefit from macroeconomic, industry and sectoral trends after doing bottom-up analysis. It’s a scheme quite suitable for investors with moderate risk profile.

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