Mirae Asset Large & Midcap Fund

• Large Cap Stocks (35 – 65%): Top 100 stocks by market capitalization.
• Mid cap Stocks (35 – 65%): 101st to 250th stocks by market cap (universe of 150 stocks).
• The balance of the scheme assets can be deployed across market cap segments (including large cap, mid cap and small cap) and asset classes at the fund manager’s discretion.

SEBI classifies the top 100 stocks by market capitalization as large cap while the next 150 largest stocks by market capitalization are classified as midcap. Large cap stocks are less risky (prices are less volatile) than midcap or small cap stocks. Midcap stocks may be riskier than large cap stocks but has the ability to deliver higher returns in the long term.

The fund can take exposure in stocks other than large and midcap subject to the restrictions for the category mandated by SEBI and in its Scheme Information Document.

SEBI has, vide its circular no. SEBI/HO/IMD/DF3/CIR/P/2017/114 dated 6th October 2017, defined large cap, mid cap and small cap companies in order to ensure uniformity in respect of the investment universe for equity mutual fund schemes. Further, SEBI has also stipulated that AMFI shall prepare the list of stocks in this regard, in accordance with the points specified under para 8 of the circular.

Accordingly, AMFI, in consultation with SEBI and Stock Exchanges, prepares the list of stocks, based on the data provided by Bombay Stock Exchange (BSE), National Stock Exchange (NSE) and Metropolitan Stock Exchange of India (MSEI) and displays on its website https://www.amfiindia.com/research-information/other-data/categorization-of-stocks

The AMCs are required to disclose full portfolios of each scheme on a monthly basis on their website and also on their monthly fact sheet. The scheme portfolio shows investment made in each security i.e. equity, equity related instruments and other instruments as per the scheme mandate, along with the respective quantities, market value and % weightage to the NAV.

• The fund invests 35-65%+ in large cap companies (top 100 companies by market capitalization) & 35-65% in mid cap companies (companies not part of top 100 companies but fall within top 250 companies by market capitalization)
• The investment approach is bottoms up approach: driven by value investing, in growth oriented businesses.
• The investment approach is aimed at participating in high quality businesses up to a reasonable price and holding the same over an extended period of time.
• The fund gives investors the opportunity to participate in the growth of midcap companies which have the potential to become tomorrow’ bluechip companies.
• The fund follows Mirae Asset’s Equity investment philosophy of selecting businesses based on Large Market Opportunity, Sustainable Competitive Advantages, and ROI, run by management with good Corporate Governance & thought leadership, available at attractive valuations with margin of safety and portfolio management strategy which emphasizes on diversified portfolio and tactical approach with active monitoring.

The investment objective of the scheme is to generate income and capital appreciation from a portfolio primarily investing in Indian equities and equity related securities of large cap and mid cap companies at the time of investment. From time to time, the fund manager may also seek participation in other Indian equity and equity related securities to achieve optimal Portfolio construction. The Scheme does not guarantee or assure any returns.

Suggested investment tenure is 3– 5 years +.

The risk profile of Mirae Asset Large & Midcap Fund is ‘Moderately High’. Investors should understand that their principal investment in this fund will be at moderately high risk.

• Investors who primarily aim for capital appreciation.
• Investors who want exposure to both, large and midcap stocks through a single portfolio.
• Investors with long investment horizons i.e. at least 3 years or longer
• Investors with moderately high risk appetites.

The Scheme has Regular Plan and Direct Plan with a common portfolio and separate NAVs. Investors should indicate the Plan for which the subscription is made by indicating the choice in the application form. Each of the above Regular and Direct Plan under the scheme will have the following Options - 1) Growth Option and 2) Dividend Option. Under the dividend Option, there will be 2 sub options -: 1) Dividend Payout and 2) Dividend Reinvestment.

Total Expense ratio or TER represents the annual fund operating expenses of a scheme, expressed as a percentage (%) of the fund’s daily net assets. All expenses of an AMC must be managed within the maximum limits of TER as per SEBI Mutual Fund Regulations.

As per the current regulations, the TER allowed is 2.25% for the first Rs.500 Crores, 2.00% for the next Rs.250 Crores, 1.75% for the next Rs.1250 Crores, 1.60% for the next Rs 3000 Crores and 1.50% for next Rs 5,000 Crores.

On the next Rs. 40,000 Crores of the daily net assets, TER reduction of 0.05% for every increase of Rs 5,000 Crores of daily net assets or part thereof, on the next Rs. 40,000 Crores of the daily net assets. Balance of assets, the TER would be 1.05%.

For example - An expense ratio of 2% per annum means that, each year 2% of the schemes’ total assets (AUM) can be used to cover operating expenses like administration, management, advertising and brokerage payment etc.

There may be changes from time to time in a mutual fund schemes. In such cases, the AMC is required to inform about the changes to all their unit holders through email, direct communication and through newspaper advertisement. If the change is pertaining to any fundamental attribute of the Scheme, the AMC shall comply with requisite procedure as prescribed in the MF Regulations, like offering one month load free exit period, etc. Apart from the above, the Scheme Information Document (SID) and Key Information Memorandum (KIM) are also required to be updated.

With effect from this financial year (2020-21), dividends are taxable in the hands of the investor. The dividend has to be added to the total income of the investor and taxed at the income tax rate applicable to the investor. TDS at the rate of 10% will be done by AMC, if the dividend from equity funds exceeds Rs 5,000 in a financial year.

Capital gains arising out of long term investments (held for more than 12 months) are tax free upto Rs 1 Lakh in a financial year. Long term capital gain over Rs 1 Lakh in a financial year is taxed at 10%. Short term (investments held for less than 12 months) capital gains are taxed at 15%.

• Minimum 35% allocation to large cap reduces portfolio stability.
• Midcap allocations of these funds have the potential of creating alphas over sufficiently long investment tenures.
• Notwithstanding market cap limits, the fund managers have enough flexibility in identifying and responding to market opportunities and potential to deliver alphas to investors.
• Investors get the advantage of investing in large and midcap stocks through a single portfolio
• Can help meet long term financial goals with the stability of large cap holdings while bringing agility through midcaps while creating wealth during the long term investment journey.

Investors can participate in the growth of emerging companies which have the potential to be tomorrow's blue-chip companies with the potential of wealth creation in the long term. Scheme mandate with minimum 35% large cap exposure aims to limit volatility. The fund has been able to outperform its benchmark over the last 10 years.

The fund’s returns are subject to market risk. The returns of the funds can be volatile and even negative depending on market conditions. Past performance of the fund may or may not be sustained in the future.