The NFO or new fund offer of the Mirae Asset Focused Fund has opened for subscription. The NFO will close on May 7. The fund will invest in a basket of 30 stocks across the large, mid and small cap space. Swaroop Mohanty, CEO of Mirae Asset Global Investments (India) Pvt. Ltd, said that providing options to investors to diversify has been the aim of the fund house and this is a way to offer another fund management style to the investor. “It is a true-blue multi cap with no sector or segment bias,” he said.
SEBI defines a focused fund as one that invests in a portfolio of not more than 30 stocks. As a multi-cap fund, Mirae Asset Focused Fund will invest in a portfolio of 30 stocks that will be diversified across the large, mid and small caps segments of the market and also across sectors and themes.
“The beauty of a focused strategy is that you get the best 30 ideas of any fund house. Unlike the diversified category where you can keep adding stocks diluting the allocation, here if you find a good 31st story, it has to be better than the top 30 to find a place in the portfolio,” he added.
Mirae Asset Focused Fund may be seen as riskier than a diversified multi-cap fund on account of the focused strategy it intends to follow. “There is a 10% cap on stock holding but we don’t intend going above 7%-7.5%,” said Mohanty. “It is an allocation product and cannot be a core product for the basic investor. For the evolved investor this can become a very useful product to have in the portfolio.”
Shilpa Wagh, founder of Wagh Financials, believes the focused category to be a good option for investors who are willing to take the risk of a concentrated portfolio but not in the core allocation.
“There are funds in this category that have done well and as a category I recommend it for investors who understand the risks from such a portfolio,” she said. “But I don’t recommend NFOs as a rule since there is no portfolio or performance to evaluate.”
This is a view that is echoed by Vikram Krishnamoorthy of Insightful. “When markets are high, as they are now, any equity exposure a person should have should ideally be into large-cap and multi-cap funds. As a category focused funds in the multi-cap space is fine even in these conditions as long as the investor has a long term to invest,” said Krishnamoorthy.
“NFOs are something that I don’t generally ask my investors to put in their money into” he added.
Mirae Asset’s existing equity funds are top performers in their categories. The Mirae Asset India Equity Fund, a multi-cap fund, has generated a return of 17.49% in the three-year period and 18.46% in the five-year investment horizon. This has now been reclassified as a large-cap fund.