Mutual Fund Review: Mirae Asset Large & Midcap Fund

Mirae Asset Large & Midcap Fund is a prominent mutual fund in India, categorized under the Large & Midcap segment.

What is the Investment Thesis of the Fund:

• Use a blend of ‘top-down’ and ‘bottom-up’ investment approaches
• The bottom-up strategy emphasizes value investing in growth-oriented businesses
• The top-down approach selects stocks poised to benefit from macroeconomic, industry, and sectoral trends
• The entire focus is to buy high-quality businesses at reasonable valuations, maintaining a ‘buy-and-hold’ strategy to realize long-term potential

What are the Pros linked to the Fund:

• Large Cap Focus: The fund holds companies that are giants in their category thereby giving overall stability to the portfolio
• Strong Performance: It has demonstrated decent long-term growth delivering annualized(every year) returns of
  • 20.37% over the last five years
  • 20.32% since inception (in July 2010)
• Experienced Management: Managed by seasoned professionals, the fund benefits from prudent investment strategies and effective risk management

What are the Cons linked to the Fund:

• Too Over diversified: The fund holds more than 100 stocks in its portfolio – thereby losing the idea of active management. In these circumstances, Index Funds (like Nifty 50 or Nifty 100) offer better value for money
• High AUM: With an Asset Under Management (AUM) of Rs 38,680.34 crores as of December 22, 2024, managing large funds can pose challenges in maintaining high returns
• Market Volatility Exposure: Investments in mid-cap stocks can be more volatile, potentially affecting short-term performance

Current Portfolio Focus:

As of the latest available data,

The fund’s portfolio is heavily weighted towards the financial services sector, with significant holdings in banks such as

• HDFC Bank (5.13%)
• State Bank of India (3.13%)
• Axis Bank (4.26%)

Final Word on the Fund:

Mirae Asset Large & Midcap Fund has shown the power of compounding with annualized returns of ~20.3%(every year) between July 2010 to December 2024 window.

This performance is on the back of Large caps performing between 2010-2019 and Midcaps performing between 2020-2024.

Having said that, the current over diversification and Fund Size goes against the fund’s ability to maintain the growth strike rate.

In this case, the investor with a 10-15 year horizon would be better off to invest in Nifty 100 or BSE 500 Index Fund and get more than decent returns.

In any case, potential investors should be aware of their risk tolerance.

Consult with your financial advisor to invest inline with your long-term goals.