Fund of Fortnight
This is our mutual fund recommendation. Every fortnight , we recommend one open-ended equity diversified fund that has the best potential of returns for the next one year considering its constituents remain the same.
Mirae Asset Emerging Bluechip Fund - Direct Plan (Growth)
Reason for recommendation
Indeed, we are going through one of the worst health crises witnessed in a century. Moreover, the resulting lockdown has put the world in a state of doldrums. The effect of these prolonged lockdowns is now clearly visible on the demand and supply of goods, which has put the economic order into a tizzy. And even though lockdowns are being partially lifted, there is a fear that this might create a second wave of infection. In such a tricky situation, investing in a fund calls for some deep thought. The best fund is the one that has major exposure to companies which are industry leaders with strong financials and good cash flow. The simple reason is that that they are most likely to return to normalcy once the pandemic issue is resolved. Here, we would like to recommend Mirae Asset Emerging Bluechip, which comes under the large-cap and mid-cap category. It has invested almost 56 per cent of its corpus in large-cap stocks, 36.56 per cent in mid-cap stocks and the remaining in small-cap stocks as of end of April 2020. In terms of sector allocation the fund is overweight on financials, healthcare, technology and energy. Even within these sectors the fund holds shares of leading companies such as HDFC Bank, Reliance Industries, Infosys, TCS and Larsen & Toubro. These are companies that are best placed to withstand the ongoing turbulent times. The fund is well-diversified with 59 stocks and its top five stocks hold only 24.73 per cent of the total portfolio while the top 10 stocks hold 38.62 per cent of the portfolio. All this has helped the fund remain a consistent performer – in fact it has been among the top quartile performers in its category. Every year since 2011 the fund has been able to beat its category returns in both rising (2014, 2017) as well as failing (2011, 2018) markets. This fund is suitable for a moderate risk-taking investor.