Fund of Fortnight
This is our mutual fund recommendation. Every fortnight , we recommend one open-ended equity diversified fund that has the best potential of returns for the next one year considering its constituents remain the same.
Mirae Asset Hybrid Equity Fund - Direct Plan
Reason for recommendation
After showing a vertical gain in last few quarters, equity market globally are facing headwinds in terms of stretched valuation, rising inflation, unwinding of the easy money by central banks and the new variant of Covid-19. In the last couple of months, markets have become more volatile, with such volatility likely to be the theme of CY22. In such a scenario, it is better to invest in hybrid funds that invest in a mixed basket of equity and debt and change their allocation to these asset classes based on various factors, including valuation.
Mirae Asset Hybrid Equity Fund is one such fund that you can look to add to your portfolio now. It is one of the best performing funds among the aggressive hybrid fund category. In the last three years, it has generated return of 22.53 per cent annually, which is higher by more than two per cent from its category as well as the benchmark. Even in shorter duration, the fund has done well. The reason for such performance is the fund’s ability to contain its downside. This is measured through capture ratio, which is 0.97 for the fund, compared to 0.86 for the category. The scheme invests around 70 per cent of its net assets in equities and follows a bottom-up approach to pick growth-oriented businesses available at reasonable valuations.
As of December-end 2021, the scheme had around 53 per cent of its net assets in large-cap stocks, 10.98 per cent in mid-caps and 9.5 per cent in small-caps. The higher allocation to large-cap provides stability to returns. Sector-wise, as of December-end 2021, the fund is overweight on financials and technology. In debt, the scheme has invested around only four per cent of the corpus in below AAA-rated debt papers. Besides, it holds papers of medium to short durations, which will help it to contain volatility in interest rates.
