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Mirae Asset launches Focussed Fund. Should you go for it?

Performance of a fund largely depends upon how well it is able to execute its strategy

twitter-logoRenu Yadav | May 1, 2019 | Updated 12:05 IST
Mirae Asset launches Focussed Fund. Should you go for it?
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Mirae Asset Mutual Fund has launched an open-ended multi-cap fund Mirae Asset Focussed Fund after recategorising its flagship fund Mirae Asset India Equity from multi-cap to large-cap. The new fund offer (NFO) will open on 23 May and will close on 7 May. As the name suggests, the fund will invest in a concentrated portfolio of 30 stocks but will have no cap or sector bias. It will invest in stocks of companies with large, mid and small market capitalisation. The fund will be managed by Gaurav Misra.

Investment strategy is what differentiates one fund from another within a given category. On the strategy of the fund Gaurav said, "Allocation is based on bottoms-up stock selection and we chose stocks based on merit of business and not whether they are large cap or mid cap. The aim is to build a portfolio of strong businesses (on growth and quality), reflecting our most attractive investment ideas."

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Performance of a fund largely depends upon how well it is able to execute its strategy. "The fund provides investors access to what we believe will be our conviction stocks and best investment ideas. The stock selection philosophy and approach will be the same as it is for the rest of the offerings from the house. The portfolio will be restricted to 30 stocks which is an appropriate enough diversification to mitigate individual stock specific risk. Having said that, the fund is appropriate for investors who already have an exposure to equities," he added.

The fund will be benchmarked against Nifty 200 Index total return index.

One should always check the track record of the fund house while investing in a new fund offer as the fund itself doesn't have any history. In this respect, Mirae Fund house scores well as all three funds of the fund house- Mirae Asset India Equity, Mirae Emerging Bluechip and Mirae Asset Tax Saver have a commendable track record and have consistently outperformed the peers and benchmark over long-term.

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Investor should understand the risk of investing in a focussed fund, if they are planning to invest in the fund. "Due to restriction on number of securities that can be there in focussed fund, the risk will be higher relatively," says Omkeshwar Singh, Head - RANK MF , SAMCO Securities. This fund is better suited for investors with higher risk appetite.  "It is best if investors analyse their risk profile beforehand and understand their own risk tolerance level, says Ankit Agarwal, Managing Director, Alankit.

Generally, investors should avoid new fund offers especially when there are existing funds offering similar products. But, given the pedigree, some advisors are recommending the investors to opt for the fund. "There are many funds now with the same investment objective and have been performing well.  Since this will follow a focussed strategy, investors investing in it should be prepared to see higher volatility. I will recommend the fund to investors, not because it is an NFO but because of the fund management team of Mirae AMC who has been consistent in generating the performance from most of their funds. I would still recommend investors to allocate 10-15 per cent of their multi-cap exposure in this strategy, " says Jitendra P.S. Solanki, a financial Planner.

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