Right calls, good timing

MIRAE ASSET EMERGING BLUECHIP FUND

Mirae Asset Emerging Bluechip Fund has been ranked 1 under CRISIL Fund Rank for the quarter ended December 2016. It has been ranked in the top 30 percentile (CRISIL Fund Rank 1 or 2) for the past eight consecutive quarters in the small- and midcap equity category.

The fund aims to generate income and capital appreciation from a diversified portfolio predominantly investing in Indian equities and equityrelated securities of companies which are not part of the top 100 stocks by market capitalisation and have market capitalisation of at least ~100 crore at the time of investment. Launched in July 2010, the fund is currently managed by Neelesh Surana. It had quarterly average assets under management of ~2,907 crore for the quarter ending December 2016. Consistent outperformance The fund has consistently outpaced its benchmark (Nifty Free Float Midcap 100) and the category (funds ranked in the smalland mid-cap category in December 2016 CRISIL Mutual Fund Ranking) across time frame by a wide margin under analysis. It has returned 46.96 per cent absolute returns in one year’s time frame as compared to the benchmark’s 39.41 per cent and the category’s 35.68 per cent.

The fund has consistently outperformed its peers and the benchmark index during all the market phases and has managed to give positive returns (see chart). The fund has surpassed the benchmark and the category during the European crisis, generating positive annualised returns of 4.93 per cent in contrast to the category’s -0.95 per cent and the benchmark’s -7.25 per cent. It continued to outperform after the European crisis and during the latest Chinese slowdown phase, delivering annualised returns of 65.09 per cent and 17.72 per cent, respectively.

An investment of ~1,000 in the fund since inception would have grown to ~4,054 by February 2017 at an annualised rate of 23.48 per cent. A similar amount invested in the category and the benchmark would have grown to ~2,850 at 17.10 per cent and ~1,971 at 10.76 per cent, respectively.

A monthly systematic investment plan (SIP) of ~1,000 over five years would grow to ~1,29,027 (on a principal of ~60,000), delivering annualised returns of 31.40 per cent vis-àvis the benchmark’s 20.34 per cent (~99,191). Portfolio analysis In the past three years, the fund has, on average, held 65 stocks, with the top five accounting for 17.14 per cent of the total holdings. Of the 65 stocks, 21 have been held consistently over the three years. Of these 21, the top five are Hindustan Petroleum Corporation (average exposure of 3.19 per cent), ICICI Bank (3 per cent), Federal Bank (2.78 per cent), Sundaram Finance (2.68 per cent) and Gateway Distriparks (2.29 per cent).

Over the three years, the top five sectors have, on average, formed 48.15 per cent of the portfolio. The fund has had the highest exposure to banking (13.84 per cent), followed by pharmaceuticals (10.43 per cent), consumer non-durables (7.50 per cent), finance (7.39 per cent) and auto ancillaries (6.71 per cent).

Doing justice to its highest exposure, the banking sector has been the top contributor for the fund in these three years, followed by finance and petroleum products. Among the stocks, Hindustan Petroleum Corporation, Federal Bank and Sundaram Finance were the top contributors. Notably, four of the five top contributing stocks in the fund’s portfolio have been held consistently for the 36 months, which highlights the fund manager’s right conviction.

What has worked for the fund is its ability to identify the right entry and exit timing into/from the right sector. For instance, exposure to pharma sector reduced over the past year, despite it being in the top five sectors. Similarly, increased exposure to the auto ancillaries sector in 2016 has paid off.