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Mirae Asset India Opportunities Fund

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Seeking opportunity with measured risk

 

Mirae Asset India Opportunities (Mirae opportunities) is a good diversifier for investors seeking market opportunities without taking on undue risks. With a return of 10.5 per cent in the last three years, the fund comfortably beat its benchmark BSE 200 return of 3.4 per cent. While the fund seeks to tap opportunities across market capitalization segments, it has largely stuck to large-cap stocks. It is for this reason its risk profile will seem altered compared with other 'opportunity' funds.

 

Suitability

 

Mirae Opportunities is suitable for investors whose risk appetite is not high. You may consider the fund to be one notch higher than large-cap funds in terms of its risk-return profile and lower than other opportunity funds like Reliance Equity Opportunities. UTI Opportunities too, in recent times, sports a more large-cap biased portfolio.

 

That said, Mirae Opportunities still has a less-than-five-year record, having been launched only in March 2008. It may not have witnessed the full magnitude of the 2008 fall as it held 15-20 per cent in cash in the initial months after launch. Also, it has not tested spectacular rallies like the one in 2006-07.

Still, its robust return in 2009 and ability to contain declines in 2011 speak for the fund. While the fund need not be your core holding, you can consider limited exposure of less than 10 per cent of your holdings in the scheme. Opt for growth plan and invest through SIPs with at least a three-year perspective.

 

Performance

 

Mirae's one-year returns, calculated every day (on a rolling basis) since its launch suggests that the fund beat its benchmark 100 per cent of the times. That is a sound record. Also, its average one-year returns based on rolling it daily is 27 per cent, as against 6 per cent by BSE 200. This record means that the fund can generate benchmark-beating returns irrespective of when you invest. Over the last three years, Mirae beat most opportunity funds except Reliance Equity Opportunities.

The latter's three-year returns was 6 percentage points higher. Higher exposure to mid and small-cap stocks by Reliance is the primary reason. Reliance holds less than half of its assets in large-cap stocks of over Rs 10,000 crore market cap as against Mirae's holding of 75 per cent. Mirae kept pace with UTI Opportunities over a three-year period, what with UTI too, turning to large-cap stocks. In fact, Mirae managed to beat UTI Opportunities in the 2009 and 2010 rally, suggesting that Mirae has a higher correlation with market movements compared with UTI Opportunities. Simply put, it may deliver more in rallies compared with UTI. In a fall (such as the one in 2011) though, while it did exceedingly well in containing declines, UTI did a better job.

Portfolio

Mirae has a fairly diversified portfolio and holds about 55 stocks on most occasions. It seldom moves to cash and tries to stay fully invested in equities (at around 94-96 per cent).

 

Over the last one year, the fund stocked up on banking scrips, some of which delivered well and reduced stakes in FMCGs. But it increased exposure to another defensive sector, pharma. Software sector was also pruned, while auto and auto ancillaries were increased. While the usual suspects such as ICICI Bank, HDFC Bank and ITC returned well, other interesting picks such as Titan Industries and Zee Entertainment Enterprises also propped performance.

 

The fund is managed by Neelesh Surana and Gopal Agrawal. Its asset size has steadily grown and now stands at Rs 257 crore.

Happy Investing!!

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