Mirae Asset India Equity Fund Becomes Large Cap - What Should Investors Do?

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Mirae Asset India Equity Fund, the highly anticipated multi-cap scheme offered by Mirae Asset MF is getting reclassified into a large-cap scheme and will be known by the name of Mirae Asset Large Cap Fund. The investors have been given a window to exit the scheme without any exit load if they don’t wish to restructure the investment strategy. The fund has a large investor base and holds AUM of Rs 10,560 crore. What should investors do? Should they stay invested? Or shift to a different multi-cap scheme? Read till the end as we try to answer most of your queries but before that, let’s take note of some key highlights of this reclassification.

• Mirae Asset Mutual Fund stated the change in category of its flagship scheme on 28th March.
• The change in category will be effective from 1st May 2019.
• No exit load will be charged if the investor wishes to exit the scheme from 1st to 30th April 2019.
• Mirae Asset Large Cap Fund will invest a minimum of 80% in large-cap stocks.
• The benchmark of the scheme will also be changed from S&P BSE 200 Total Return Index (TRI) to Nifty 100 TRI.
• The decision has been taken to maintain liquidity and reduce the risk.
• No significant change in the investment approach as the multi-cap fund already invested 80% in large-cap stocks, said Swarup Mohanty, CEO of Mirae Asset Mutual Fund.
• LTCG and STCG will be charged at prevailing rates for redemption.

Mirae Asset India Equity Fund has been a tremendous performer in the category of the multi-cap fund and has consistently beaten benchmark as well as category average every time since inception in 2008. The portfolio of the fund has always been highly inclined towards the large-cap stocks and more than 80% of the corpus is invested in the large-caps. As stated by Mr Mohanty, the reclassification will have no major effect on the investment strategy as the scheme was already investing predominantly in the large caps. Although the freedom to take advantage of the rise and fall in mid and small-cap stocks will be overruled.

What Should Investors Do?

Already invested investors who follow portfolio-based investment and invest across categories i.e. large-cap, mid-cap, small-cap, etc can stay invested because this fund can provide a cushion against downfall and manage overall portfolio risk. If such investors seek diversification in the portfolio, new investments can be started partially in a mid and small-cap fund. If they cannot start new investments, a partial redemption can be made for the same from Mirae Asset India Equity Fund but that will incur tax implication of LTCG and STCG. Investors who follow fund-based investing or prefer better risk management and expect an average return of 12% per annum can also stay invested because they can still meet their investment objective from the same fund as Mirae Asset Large Cap Fund is expected to perform similarly as Mirae Asset India Equity Fund.

For New Investors

Those investors who want to invest in a multi-cap fund to enjoy the flexibility of investing across market caps are suggested to choose a scheme with a multi cap approach. However, those investors who seek for a pure equity fund at moderate risk can consider investing in Mirae Asset Large Cap Fund for long term capital appreciation. As the fund has shown a terrific performance by investing majorly in large-cap stocks, this can be an ideal choice in the large cap category. The newly formed scheme will also be suitable for first-time investors who want to invest in a pure equity scheme.

Experts’ Take

Mirae Asset India Equity Fund has been a tremendous performer since inception and has added value to thousands of portfolios. Such revamping in fund mandates are always undesirable for the investors but these have been made to accommodate the investors by making the investment strategy and objective clear. The fund always had a strong large-cap inclination and no significant changes in the outcome are expected. The AMC will not charge any exit load if the investor wishes to withdraw but the tax implications will remain prevalent. However, it is suggested that you wait for a while and watch the performance before taking any arbitrary decision. Those who still wish to restructure the portfolio, can take the assistance of the experts or can raise a query through the form provided below.