NFO . Mirae Asset Focussed Fund: Stock-picking matters in a focussed portfolio

Mirae Asset Mutual Fund has launched the Mirae Asset Focused Fund. The fund will invest in up to 30 stocks with a multi-cap approach.

While a multi-cap approach offers the flexibility to churn the portfolio across market capitalisations depending on market conditions, a concentrated portfolio pegs up the risk of such funds. A well-tested stock-picking approach though can help mitigate the risk to an extent.

The fund

Under SEBI’s categorisation norms, focussed equity funds can invest in a maximum of 30 stocks, with minimum equity exposure of 65 per cent. Schemes need to specify where they intend to focus — multi cap, large cap, mid cap or small cap. According to the scheme information document, Mirae Asset Focused Fund intends to focus on the large cap, mid cap and small cap categories. It is essentially following a multi-cap strategy.

The fund aims to build a portfolio of strong growth companies — those with robust business models, sustainable competitive advantages compared to their competitors, and high return ratios.

The performance of the scheme will be benchmarked to the Nifty 200 (TRI). The NFO opened on April 23 and closes on May 7.

Gaurav Misra, Senior Fund Manager, will be managing the fund. He recently joined Mirae after a 13-year stint with ASK Investment Managers, where he managed focussed fund strategies. Since January, he has been managing the Mirae Asset India Equity Fund jointly with Neelesh Surana and Harshad Borawake.

Mirae has a relatively fewer number of equity funds across categories. Hence, adding another fund under a new category will help widen its asset and investor base.

Existing alternatives

As an investor, though, you need to understand that there are already established funds from other fund houses in the focussed funds category. Given that the risk pegs up with a compact portfolio of stocks, prudent stock picking is important. Hence, assessing the long-term performance of existing funds across cycles can help you make a sound choice. It is difficult to gauge the performance of any NFO by virtue of it being new. Hence, you can wait and track the performance of Mirae Asset Focused before investing.

There are about 15 funds under the focussed equity category currently. Many of these have a long track record of managing a concentrated portfolio of stocks across cycles. SBI Focused Equity, Franklin India Focused, ICICI Pru Focused Equity and Aditya Birla SL Focused are some of the top performing funds in this category. They have delivered 12-18 per cent annual returns over three- and five-year periods.

Mirae Mutual Fund has top performing equity funds in other categories in its stable. Mirae Asset Emerging Bluechip, a large- and mid-cap fund, has given 25 per cent annual returns over the past five years. If you are keen on a multi-cap approach, there is Mirae Asset India Equity, a top-performing fund giving about 18 per cent annual return over a five-year period. It has about 60 stocks in its portfolio, mitigating concentration risk.

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