Mirae Asset India Opportunities Fund  Invest Online

Fund: Mirae Asset India Opportunities Fund
Inception: April 4, 2008
Fund Managers: Neelesh Surana, Gopal Agrawal
Benchmark: BSE 200

When one looks at the name, it would appear to be a very aggressive offering. The notion of opportunities funds are such that they rapidly churn their portfolio in a bid to make a quick buck and take dominant positions where possible.

However, that is not the case with Mirae Asset India Opportunities Fund. This is a diversified equity offering with no bias to theme or sector. It claims not to have a market capitalization bias but there is no denying the tilt towards large-cap stocks. Over the past few years, exposure to large caps has hovered around 80%.

The fund’s assets under management are not huge. Being a relatively small fund, the number of stocks it holds fluctuates between 47 and 57. This makes for a very diversified offering and not one where you will see strong stock bets. The fund managers are not conservative but neither are they overly aggressive. It would right to say that they sort of take the middle road and are judicious in their investment calls.

The fund follows a dual strategy of core and tactical allocation. In its core portfolio, which should cover around 70-75% of the portfolio, the fund managers tend to stick to a buy-and-hold philosophy. They look for quality of businesses (businesses with scalability and sustainable competitive advantage with strong pricing power, high return on investment and strong earnings growth), management competency and, of course, valuations.

Where the tactical allocation is concerned, the fund managers attempt to capitalize on short-term movements in the market but prefer sticking to large-cap names because liquidity is the key concern here.

The fund completed 5 years yesterday and its performance has got it noticed. Launched in the market mayhem of 2008, it appeared doomed from the start. In fact, its numbers were not impressive during the three quarters of 2008. Since then, it has outperformed its benchmark every single calendar year. Even when the market fell in 2011, this one’s fall was less than that of its benchmark.

In its very first calendar year (2009) it trounced the competition with a return of 109%, way ahead of the benchmark’s 88%. A prime reason being that it was fully invested at the start of the rally in March that year. Though it could also be attributed to being underweight on few of the underperforming sectors like Real Estate, Construction and Capital Goods. What makes this performance so impressive is that the fund managers put up such a number despite maintaining a low exposure to Auto (BSE Auto delivered 204% in 2009).

Last year was not noteworthy since the fund managed to outperform the benchmark by just around 2.28%. Put it down to missed bets in Oil and Infotech. Though the fund has never beaten the benchmark by its wide margin of 2009, it continues to be a persistent outperformer. We have no doubt concerning the quality of this offering. In 2012, this fund made an entry in our recommended performers list. We continue to recommend it. The fund’s track record shows that it can handle down markets as well as bull runs and consistently outperform its benchmark.

Those on the look-out for a fairly non-aggressive and well diversified offering with a large-cap tilt should seriously consider this fund.