Fund of Fortnight
Ninad RamdasiCategories: DSIJ_Magazine_Web, DSIJMagazine_App, Fund of Fortnight, MF - DSIJ Recommendation, Mutual Fund
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.
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
After a prolonged period of sluggish consumption over the past year and a half, we are finally seeing early signs of a pickup. With expectations of a better monsoon season and several states gearing up for elections in the coming months, we anticipate an increase in populist measures that could further stimulate consumption. In light of this, our mutual fund selection this time is the Mirae Asset Great Consumer Fund. The fund has demonstrated an impressive performance compared to its category average across various time periods, especially in the longer duration. Over the past three years, the fund has achieved a return of 24.90 per cent, surpassing the category average of 23.67 per cent. Further, over the past 10 years, the fund significantly outperformed with a return of 19.59 per cent compared to the category average of 17.66 per cent. The fund maintains a diversified portfolio, primarily concentrated in sectors that are poised to benefit from an uptick in consumption. Consumer staples (25.58 per cent) form the largest part of the portfolio, reflecting the fund’s focus on essential goods that are consistently in demand. The next big sector is services (18.76 per cent). Automobile (15.66 per cent) too holds significant allocation, one of the key drivers of economic growth and consumer spending. The fund’s top individual holdings further illustrate its strategic positioning within the consumption space.
ITC Ltd. (5.36 per cent), Hindustan Unilever Ltd. (4.98 per cent), Trent Ltd. (3.77 per cent) and Zomato Ltd. (3.45 per cent) remain some of the top five holdings of the fund. Compared to other funds in the same category, this fund has lower beta of 0.76, which is significantly lower than the category average of approximately 1.11. This indicates that the fund is less sensitive to market volatility. Besides, the fund has one of the lowest expense ratios in its category. It is suitable for moderate risk-taking investors with an investment horizon of more than one year.
