Investors looking to participate in equities but wanting to play it safe — in view of rich market valuations — can consider taking systematic exposure in Mirae Equity Opportunities.

The fund has outperformed its benchmark, S&P BSE 200, across market cycles and in each of the calendar years, since its inception in April 2008. In the last one year, it has given a return of 24.8 per cent as against 19 per cent for S&P BSE 200.

It is the best among the ‘opportunities funds’; its returns in the last one year were relatively higher than that for DSP BR opportunities (23.2 per cent), Reliance Equity Opportunities (19.1 per cent), Franklin India Opportunities (17.9 per cent) and UTI Opportunities (12.5 per cent).

Even in the last three years, it outperformed its benchmark by giving annualised return of 18.9 per cent as against 12.2 per cent for S&P BSE 200. While its three-year returns were a tad lower than that of DSP BR Opportunities, over the last five years, it continues to top the charts with annualised returns of 22.7 per cent.

The fund has been a consistent outperformer. On a one-year rolling return basis, it has outdone its benchmark 99.6 per cent of the time in the last three years.

Interestingly, in the past, the fund has managed to outperform its benchmark even during the bear phases of 2008 and 2011.

The fund is a multi-cap with mandate to invest in large-cap and mid-cap stocks. However, as of now, it is safely constructed with about 82 per cent of its portfolio in large-cap stocks.

The fund has remained almost fully invested into equities — with cash and cash equivalents being below the 10 per cent levels of its portfolio since the start of 2010. As of June 2017, it had 2.1 per cent of its portfolio in cash and cash equivalents.

Winners and losers

Over the last one year, its exposure to auto ancillaries, pharma and cement has reduced, while that to steel and banks (private sector) has increased.

HDFC Bank, ICICI Bank, HDFC, Larsen & Toubro and SBI are its top five picks. In the last one year, it added Grasim Industries, Vedanta, Bajaj Auto and Havells India while completely exiting the counters of Motherson Sumi Systems, UltraTech Cement and Natco Pharma.

HDFC Bank, Maruti Suzuki, ICICI Bank, HPCL and Ceat were top bets that paid off in the last one year while Infosys, Lupin and Sun Pharma contributed negatively to the fund’s returns.

After our last recommendation made on the fund in November ’16, there has been a churn in the top management. Gopal Agrawal, CIO of the fund, quit early this year and fund manager Neelesh Surana has ever since been elevated to that post. The fund is now jointly managed by Neelesh Surana and Harshad Borawake.

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