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.

Mirae Asset Large Cap Fund - Direct Plan

Reason for recommendation

The trend witnessed over the past few weeks continued even during in the last fortnight. Frontline indices are now at a striking distance of an all-time high reached almost a year ago. Hence, in the short term, having exposure to Large-Cap funds makes more sense. In this large-cap space, we believe that Mirae Asset Large-Cap Fund is a more sensible choice owing to its historical performance and credible track record. It has outperformed its benchmark, Nifty 100 Total Return index since inception. If we look at its calendar year returns, then 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. If we look at its risk-adjusted returns, it has one of the best risk-adjusted returns in the category as measured by Sharpe ratio. This fund holds around 59 stocks with the top 10 stocks contributing 54 per cent of its overall assets while 55 per cent of the assets are covered by the top three sectors. This is bit concentrated but when compared to its benchmark it is still quite diversified. Looking at its asset allocation, about 83 per cent is allocated towards large-caps while the remaining 16.18 per cent and 0.95 per cent have been allocated towards Mid-Caps and Small-Caps, respectively.

The fund manager broadly analyses the macro economy, industry trends and business cycles before investing in any stock. He is likely to invest in companies that benefit from macroeconomic factors, industry and sectoral trends and after doing bottom-up analysis. The fund is well-poised to continue its outperformance as it is overweight on sectors like banking and financial, IT, healthcare and automobile, while is underweight on energy, consumer staples and materials. Its top holdings consist of stocks like HDFC Bank, ICICI Bank, Infosys, Reliance, Axis Bank and SBI Bank. This scheme is more suitable for investors with a moderately aggressive risk profile.