Fund of Fortnight

MF Select

Mirae Asset Emerging Bluechip Fund - Direct Plan (Growth)

Reason for recommendation



The current situation of the equity market is making investing in stocks difficult. There is no clear trend that is emerging. You may find one day the broader market is showing sign of strengths and on another day, the frontline indices may be performing better. Hence, the right strategy to invest currently is to invest in large and mid-cap funds. This category of fund is required to invest at least 35 per cent in large-cap stocks and a similar percentage in mid-cap stocks, hence giving you exposure to both broader as well as frontline equity stocks. Large-cap stocks give you stability while mid-cap stocks help you generate alpha in your returns. Mirae Asset Emerging Bluechip is one of the best funds in this category. Currently, the fund holds 53 per cent of its assets in large-cap stocks, around 35 per cent in mid-cap stocks and 11 per cent in small-cap stocks. The best part of this fund is that historically it has been able to give better returns when the market is in a downturn. For example, in the last year (2018) it fell less than the category when the overall market sentiment was negative, while in the year 2017, it outperformed both category and its benchmark. Going ahead, the fund is well-poised to take benefit of any rise in the market due to the fact that almost half of its assets are allocated to mid and small-cap stocks, which rises more when the market rises. Nonetheless, if for any reason the market fails to perform, the fund will fall less compared to its benchmark. This is because the fund is overweight on defensive sectors. One-fifth of the fund is invested in defensive sectors. Therefore, the fund is suitable for investors with a moderate risk profile and for investors who are investing with a longer investment horizon.