How is Mirae Asset emerging blue chip fund will be performing in the upcoming 10 years?

Mirae asset emerging bluechip fund is one of the top bluechip funds or large-cap funds that you will find in recent times. It invests predominantly in domestic equities, and the returns are quite high compared to many other equity funds. If you are considering this fund for your portfolio, here are certain things you need to know about this fund. 

What is the investment objective of the fund?

Mirae Asset Mutual Fund offers this fund with the investment objective of accumulation of wealth over time. Usually, the minimum tenure that is suggested for this fund is 3-4 years for reaping higher profits from the fund. If you want to accumulate a certain amount within the next few years, then this fund can be one of the best investment options. 

What is the asset allocation of Mirae Asset Emerging Bluechip Fund?

Mirae asset emerging bluechip fund has a very equity-dominated asset allocation. Almost 98% of its assets are invested in domestic equities. At present, somewhere around 47% is in large-cap companies, or you can say the blue chip companies mostly. Another 24% is approximately invested in mid-cap companies, which are emerging blue chip companies in the country. 

The fund has invested very strategically across different sectors, while the banking and finance sector is the most significant ones. If you look at the top holdings of the fund, it has ICICI, AXIS, and HDFC banks as the top three holdings. However, the fund has allocated not more than 4.5”% to any individual company. So, it is a well-diversified portfolio of stocks of different bluechip and emerging bluechip companies. 

How has the fund been performing since its inception?

The fund was launched in the year 2013, and it’s almost 10 years since the fund was on the market. Since its inception, it has offered an average annual return of 23.15% from the direct plan. It has always been one of the top funds in the large & mid cap category that belongs to. It has also outperformed in the category when it comes to 5-year or 3-year annualised returns. If you check the 5-year annualised return, you will see a whopping 16.40%, while the category average is only 13.06%. Similarly, the 3-year annualised return has been 25.01% compared to the category average of only 22.74%. 

So, all these performance histories suggest that the fund has the capacity to outperform, and that is what it is doing since its inception. 

What is the risk factor associated with this fund?

While the returns have been constantly higher from this fund, you also need to look at the risk factor associated with the fund. It invests in mid-cap companies significantly. Thus, the risk factor goes up. That said, the fund has always been offering risk-adjusted returns. The volatility of the fund, which is how it reacts to market changes, is high due to the presence of a significant number of mid-cap and small-cap securities. 

Expenses and Taxation

The expense that you need to take care of while investing in this fund is the expense ratio which is 0.69% for the direct plan. There is an exit load of 1% only which is applicable only if the fund is redeemed within 1 year of purchase. Apart from these two, taxes are levied as per equity fund taxation. If you redeem the fund within one year, then short-term capital gain taxes will be levied at the current rate of 15%, and on top of that, cess and surcharge will be added as well. However, if you stay invested for more than a year, then you have to pay only 10% long-term capital gain tax that too above profits of Rs. 1 lakh. 

How will this fund perform in the next ten years?

If you consider the historic returns of Mirae asset emerging bluechip fund and given the potential of the constituent stocks in the fund, the fund can continue to grow at a very fast pace. In the past ten years, it has offered around 23% per annum return while the 5-year annualised return is around 16%. So, if you even take the lower of these two that is 16% of return per annum, then your monthly SIP of Rs. 10000 can grow and accumulate a corpus of Rs. 29.65 lakhs while the investment is only 12 lakhs, so you may make a profit of 17.65 lakhs in the next ten years. 

Final thoughts

If you are looking for a fund that will offer you a higher return at a moderate risk level, then Mirae asset emerging bluechip is the fund you can consider. With the equities of companies that are in the growth stage, the fund has immense potential for huge returns.