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.

Reason for recommendation

On the global front, the equity markets are yet to finally take a concrete decision on the US’ Federal Reserve rate direction and hence are reacting sharply to any incremental piece of information. This has made the markets quite volatile. Therefore, it makes complete sense to take a pause before going aggressive with equity exposure. At this juncture, investing in an aggressive Hybrid Fund makes complete sense and we believe Mirae Asset Hybrid Equity Fund is a good qualifier for the same. 

This fund, based on its latest factsheet, has invested almost 73 per cent in equity, 20 per cent in debt and the remaining in cash. This fund has marginally outperformed its category in both the long and short term on a trailing basis. For example, in the last one month the fund is down by 1.94 per cent compared to 2.34 per cent downfall that the category has witnessed. The case continues to be the same even on a calendar year basis. In terms of risk, this fund performs in line with its category and in fact it marginally outperforms. 

Speaking about its portfolio, cash equivalent (Tri-Party Repo) is the top holding of this fund currently followed by Reliance Industries, ICICI Bank, HDFC Bank, Infosys and SBI. Among equity it has higher allocation towards Large-Cap stocks. On the sectoral front, this fund is overweight on financials and energy. On the debt side of the portfolio, it is overweight on AAA and AA-rated securities, while is underweight on government securities. However, its average maturity is little over three years, leading into a medium duration space and its YTM too is higher compared to the category. Therefore, this fund is more suitable for moderate to aggressive investors.