Mirae Asset Equity Allocator Fund of Fund invests in domestic ETFs of large cap + midcap – Should you invest?
Mirae Asset Equity Allocator Fund of Fund – Review
Mirae Asset Equity Allocator Fund of Fund NFO would open for subscription on September 4, 2020. This fund of funds is an unique mutual fund that would invest in domestic ETFs that invest in large cap and midcap stocks. While we have funds that invests in large cap + midcap stocks, there is no fund that invests in ETFs of such segments (both combined one). In this article, we would provide Mirae Asset Equity Allocator Fund of Fund NFO issue details and indicate whether one should invest in such fund of funds.
Mirae Asset Equity Allocator Fund of Fund – New Fund offer issue details
This is an open-ended mutual fund scheme.
This scheme would open for subscription on September 8, 2020.
This scheme would close for subscription on September 15, 2020.
Since this is an open ended scheme, it would again open for subscription after 5 business days from the date of allotment of MF units after the NFO period.
This scheme is available in both regular and direct plans.
This plan offers both growth option and dividend option.
This scheme is available for lump sum and SIP investment.
Minimum investment is Rs 5000 and in multiples of Rs 1 there-off for lump sum investments.
Minimum investment is Rs 1,000 per month for monthly SIP and for a tenure of 6 months.
The NAV of the NFO is Rs 10 per unit now during initial subscription.
There is no entry load to invest in this mutual fund scheme.
There is no exit load in this scheme.
This scheme is classified as moderately high risk mutual fund scheme.
Scheme total expense ratio (TER) is estimated at a maximum of 1% of the total assets on any day.
Who can invest in this mutual fund scheme?
Any of the following can invest in this scheme.
1) Resident Individuals
2) Resident Indian Nationals, including partnership forms, companies, Banks, HUFs, Sole Proprietorship etc.,
4) Foreign Portfolio Investors
Who is the Fund Manager of Mirae Asset Equity Allocator Fund of Fund NFO?
The fund manager is Ms. Bharti Sawant, 33 years who did ICFAI (Hyderabad), CFA and B.Com. Ms. Sawant has professional experience of more than 12 years and her primary responsibility includes Investment Analysis & Fund Management. She has been associated with the AMC as an Investment Analyst since September 3, 2013. She was previously associated with Sushil Finance Securities Pvt. Ltd., Latin Manharlal Securities Pvt. Ltd., Kabu Shares & Stocking Pvt. Ltd. for Financial Analysis and Research.
What is the benchmark for this scheme?
The benchmark for this scheme is NIFTY 200 Index (TRI).
What is the investment objective of this fund?
The investment objective of the scheme is to provide long-term capital appreciation from a portfolio investing predominantly in units of domestic equity ETFs.
However, there is no assurance or guarantee that the investment objective of the Scheme will be realized.
What is the allocation pattern in this mutual fund scheme?
This fund investment pattern is as follows:
1) It invests 95% to 100% in units of domestic equity ETFs. It would invest in ETFs of largecap + midcap. The risk profile in this segment is high.
2) It would invest 0% to 5% in debt, money market instruments and liquid mutual funds. The risk profile in this segment is low to medium.
Why should you invest in such Fund of Funds?
Here are a few reasons to invest in such schemes.
1) This is a unique fund would invest in domestic ETFs (large cap and midcap segments). You don’t need a demat account as you are investing in a mutual fund that invests in the ETF.
2) The underlying ETFs would invest in large cap and midcap stocks. Large cap stocks are generally stable and midcap stocks are potential multi baggers. Such funds can provide stability + faster growth.
3) Large cap stocks might pay dividends too. This could provide dividend yield to your fund’s portfolio too, though not guaranteed.
Some risk factors you should consider before investing in such funds
One should consider some of these risk factors / negative factors before investing.
1) This scheme invests in ETFs which in turn invests in large cap or midcap stocks. Fund manager does not have any control or selection of underlying stocks. Fund manager selection of appropriate ETFs is key here. If there is a wrong ETF selection, fund performance would get impacted.
2) This fund would invest in ETFs that invests up to 95% in equity of large cap and midcap. There is no upper cap on midcap segment. Means it can turn to be high risk if the fund manager increases midcap segment ETFs in the overall portfolio.
3) Since it is a new mutual fund scheme, there is no past performance, hence we would not know, how the fund would perform in the future.
4) You can go through all risk factors indicated in the scheme related documents before investing.
How is the Performance of existing Largecap and midcap funds?
While there is no exact related fund to compare, let us check the performance of some of the mutual funds which invests in combo of large cap + mid-cap mutual funds.
Should you invest in the Mirae Asset Equity Allocator Fund of Fund NFO?
This mutual fund scheme is a fund of fund that invests in ETFs which invest in large cap stocks and midcap stocks. Midcap segment is high risk. If you are a high risk investor and believe that such combo would work for you, you can invest in such funds.
Also, instead of investing in such combo funds that invests in all large cap + midcap segments, one can invest in individual large cap funds and midcap mutual funds. If you feel any fund is not performing or particular segment is lagging, you can always replace with a better one. However, such choice is not available if you invest in such combo funds that invests in both segments.
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