Mirae Asset India Opportunities Fund - Outperforms the benchmark convincingly

Swapnil Suvarna reviews Mirae Asset India Opportunities Fund which has outperformed its benchmark, the BSE-200, since inception. The next big challenge for the fund would be to sustain its credible performance even with an increase in corpus

Mirae Asset India Opportunities Fund launched in April 2008, aims to generate long term capital appreciation by discovering and investing in potential investment opportunities arising from Indian economic growth with risk mitigating and controlling measures. The fund has the flexibility to identify opportunities across themes, sectors or market cap with a focused approach towards its investments. Also, in comparison to various equity diversified funds, the fund management approach is to aggressively manage the portfolio to capture the early upswing. The fund performance is benchmarked against BSE-200 and is managed by Gopal Agarwal and Neelesh Surana.

Portfolio analysis

The fund invests in scrips selected through bottom-up approach especially from sectors identified through the top down approach. The fund adheres to a dual strategy of investing; it maintains 60 to 70 per cent of its core portfolio with value picks and the remaining 30 to 40 per cent of its portfolio with strategic opportunistic moves. This systematic diversification of the fund portfolio through various asset classes has made it minimize risk which is reflected in its performance. However, the portfolio turnover ratio has been on the higher side which could be critical for a small fund like this.

The fund has invested major portions of its corpus in scrips from sectors like banks, IT software, auto-ancillary, pharmaceuticals, oil exploration, power generation and refineries. Other than these sectors, debt instruments and cash have held significant positions in the portfolio during unstable periods. Its relatively small size has kept the fund manager alert during volatile markets, thereby placing them in a better position to identify and capitalize early on suitable investment ideas.

Perfomance analysis

Since inception the fund has reported an excellent CAGR of 17 per cent against its benchmark which has recorded a CAGR of 6 per cent during the same period. In its short life span the fund has exhibited fair downside protection abilities. A major highlight of this small fund is the vigour shown during the bear phase in 2008 and sideways market thereafter when it was able to reshuffle its portfolio in response to the market volatility.

Although the performance over the benchmark in a short span has been impressive, the fund corpus is still below Rs.200 crore. In future, the next big challenge for the fund would be to sustain its credible performance even with an increase in corpus.