Mirae Asset Tax Saver Fund: Identifying Long-term Growth Opportunities

[Read: How to Select the Best ELSS for Tax-Saving in 2022]

Mirae Asset Tax Saver Fund is a process-driven tax-saving fund that has built a superior track record and gained popularity among investors in a shorter time span.

Past performance is not an indicator of future returns
Data as on October 11, 2022
(Source: ACE MF)

Mirae Asset Tax Saver Fund does not have a very long-term track record to its credit. However, the robust performance numbers it has registered in a short span of time is sufficient to prove its high return potential. The fund has stood strong against its popular peers and has managed to outperform the category average as well as the benchmark by a noticeable margin across most time periods. Over the long-term horizon of 3 years and 5 years, Mirae Asset Tax Saver Fund has respectively generated returns at 21.8% and 15.6% CAGR, which is among the highest in the category and clearly stands far ahead of the benchmark.

More importantly, Mirae Asset Tax Saver Fund has achieved this feat at a reasonable risk, thus rewarding its investors with superior risk-adjusted returns. The Sharpe Ratio (0.23) reflecting the fund's ability to deliver better risk-adjusted returns has been commendable too.

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Investment strategy of Mirae Asset Tax Saver Fund

With an investment objective of generating long-term capital appreciation from a diversified portfolio of predominantly equity and equity-related instruments, Mirae Asset Tax Saver Fund is mandated to hold at least 80% of its assets in equities. The fund has no bias towards any particular theme or investment style and holds a well-diversified portfolio of strong growth companies available at a reasonable price. The universe of stocks for the portfolio comprises majorly of companies having robust business models, enjoying sustainable competitive advantage, and having high growth ratios.

Following a mix of a top-down and bottom-up approach to investing, the fund manager broadly analyses the macroeconomy and invests in stocks of high-growth companies expected to benefit from macroeconomic, sectoral, and industry trends. While picking companies, the fund manager tests the business on various quantitative and qualitative parameters and gives importance to ROCE, growth, ROI, value, and management. He looks for growth businesses and, within that, looks for value (buy at a reasonable rate). The fund manager uses the DCF (Discounted Cash Flow) mechanism to estimate the fair valuation level of stocks.

The fund aims to identify long-term investment opportunities in stocks of high-quality businesses available at reasonable prices and follows a buy and hold investment strategy until its full potential is derived. Mirae Asset Tax Saver Fund has had a moderate portfolio turnover of around 70-80% in the last one year.

Mirae Asset Tax Saver Fund usually holds a well-diversified portfolio of stocks spread across market caps but with a large-cap bias. As of September 30, 2022, Mirae Asset Tax Saver Fund held as many as 70 stocks in the portfolio. The top 10 stock holdings in the portfolio accounted for nearly 44.5% of the total assets. Large-cap names like HDFC Bank, ICICI Bank, Reliance Industries, Infosys, and Axis Bank, among others, appear in the list of its top holdings. Notably, 4 out of the top 10 stocks belong to the Banking sector. Most of these stocks have been part of the fund's top holdings for over 2 years now.

In the last one year, Mirae Asset Tax Saver Fund benefitted the most from its holdings in ICICI Bank, SBI, ITC, SKF India, and Bharti Airtel. However, the fund's holdings in Infosys, HDFC Bank, TCS, Mphasis, Tata Steel, Gujarat State Petronet, etc., eroded some of its gains.

Banking and Finance stocks together form about 34.3% of its portfolio. The fund also holds substantial exposure in Infotech, Consumption, Engineering, Petroleum, Pharma, Telecom, and Auto, having allocation in the range of 3% to 10% of its assets. The top 10 sectors together occupied 80.9% of the fund's portfolio. Although Mirae Asset Tax Saver Fund's portfolio is skewed towards cyclicals, it is fairly diversified to defensives as well.

Suitability

Belonging to a process-driven fund house that follows a cautious investment approach, Mirae Asset Tax Saver Fund has benefited by investing in high growth-oriented stocks but at the right valuations. The superior stock-picking strategy has helped it identify the right stocks and outpace the market across time periods. It has been agile enough to take advantage of various investment opportunities present across segments.

Mirae Asset Tax Saver Fund is managed by an experienced fund manager, Mr Neelesh Surana, whose stock convictions have proved to be rewarding for investors in the scheme.

The fund does not resort to taking aggressive calls for extraordinary returns but maintains a diversified portfolio of quality stocks with a long-term view. This strategy of the fund house has enabled it to keep the risk under control and perform well even in uncertain market conditions.

Mirae Asset Tax Saver Fund is suitable for investors looking to invest in a well-managed ELSS with a view to benefit from wealth creation and tax-saving over an investment horizon of 3-5 years.

Warm Regards,
Divya Grover
Research Analyst

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Note: This write up is for information purpose and does not constitute any kind of investment advice or a recommendation to Buy / Hold / Sell a fund. Returns mentioned herein are in no way a guarantee or promise of future returns. As an investor, you need to pick the right fund to meet your financial goals. If you are not sure about your risk appetite, do consult your investment consultant/advisor. Mutual Fund Investments are subject to market risks, read all scheme related documents carefully.

DISCLOSURE AS PER SECURITIES AND EXCHANGE BOARD OF INDIA (RESEARCH ANALYSTS) REGULATIONS, 2014

About the Company including business activity

Quantum Information Services Private Limited (QIS) was incorporated on December 19, 1989.

QIS was promoted by Mr Ajit Dayal with an objective of providing value-based information/views on news related to equity markets, the economy in general, sector analysis, budget review and various personal products and investments options available to the Public. It was the first company to start equity research on an institutional level.

'PersonalFN' is a service brand of QIS and was started in the year 1999. In 1999, the Company registered the Domain name www.personalfn.com for providing information on mutual funds and personal financial planning, financial markets in general, etc. and services related to financial planning and research in various financial instruments including mutual funds, insurance and fixed income products to customers. It offers asset allocation and researched investment recommendations through its financial planning services.

Quantum Information Services Private Limited (QIS) is registered as Investment Adviser under SEBI (Investment Adviser) Regulations, 2013 and having Registration No.: INA000000680. In terms of the second proviso to Regulation 3 (1) of SEBI (Research Analysts) Regulations, 2014 the Company is not required to obtain Certificate of registration from SEBI.

Disciplinary history

There are no outstanding litigations against the Company, its subsidiaries and its Directors.

Terms and condition on which its offer research report

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Details of associates

1. Money Simplified Services Private Limited;

2. PersonalFN Insurance Services India Private Limited;

3. Equitymaster Agora Research Private Limited;

4. Common Sense Living Private Limited;

5. Quantum Advisors Private Limited;

6. Quantum Asset Management Company Private Limited;

7. HelpYourNGO.com India Private Limited;

8. HelpYourNGO Foundation;

9. Natural Streets for Performing Arts Foundation;

10. Primary Real Estate Advisors Private Limited;

11. HYNGO India Private Limited;

12. Suresh Lulla;

13. I V Subramaniam.

1. ‘subject company’ is a scheme on which a buy/sell/hold view or target price is given/changed in this Research Report;

2. 2. Neither QIS, it's Associates, Research Analyst or his/her relative have any financial interest in the subject Company; except for one of the Research Analysts holding units of Mirae Asset Tax Saver Fund;

3. Neither QIS, it's Associates, Research Analyst or his/her relative have actual/beneficial ownership of one per cent or more securities of the subject Company, at the end of the month immediately preceding the date of publication of the research report;

4. Neither QIS, it's Associates, Research Analyst or his/her relative has any other material conflict of interest at the time of publication of the research report except that QIS (PersonalFN) is, as per SEBI (Mutual Funds) Regulations 1996, an associate / group Company of Quantum Asset Management Company Private Limited and Trustees and Sponsor of Quantum Mutual Fund (QMF) and to that extent there may be conflict of interest while recommending any schemes of QMF. However, any such recommendation or reference made is based on the standard evaluation and selection process, which applies uniformly for all Mutual Fund Schemes. The payment of commission (upfront / annualized & trail), if any, for any Schemes by QMF to QIS (PersonalFN) is also at arm's length and as per prevailing market practices.

1. Neither QIS nor it's Associates have received any compensation from the subject Company in the past twelve months;

2. Neither QIS nor it's Associates have managed or co-managed public offering of securities for the subject Company;

3. Neither QIS nor it's Associates have received any compensation for investment banking or merchant banking or brokerage services from the subject Company;

4. Neither QIS nor it's Associates have received any compensation for products or services other than investment banking or merchant banking or brokerage services from the subject company in the past twelve months.

5. Neither QIS nor it's Associates have received any compensation or other benefits from the subject Company or third party in connection with the research report

1. The Research Analyst has not served as an officer, director or employee of the subject Company.

2. QIS or the Research Analyst has not been engaged in market making activity for the subject Company.

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Quantum Information Services Private Limited CIN: U65990MH1989PTC054667 Regd. & Corp. Office: 103, Regent Chambers, 1st Floor, Nariman Point, Mumbai - 400 021

Email:info@personalfn.com Website: www.personalfn.com Tel.: 022 61361200 Fax.: 022 61361222 SEBI-registered Investment Adviser. Registration No. INA000000680, SEBI (Investment Advisers) Regulation, 2013