Mirae Asset Midcap Fund

At least 65% of the scheme assets should be invested in 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 and small cap) and asset classes at the fund manager’s discretion

The fund can take exposure in large and small cap stocks subject to the restrictions for the Scheme Information Document and Scheme category guidelines, mandated by SEBI.

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 Scheme invests predominantly (>65%) in to Mid-Cap equity and equity related instruments (101st -250th company in terms of full market capitalization). The fund may also participate in other Indian equities based on factors like relative valuations, liquidity and market sentiments.
• The Scheme aims to build a diversified portfolio of companies having robust business models which have the potential to grow into tomorrow’s large caps across industry sectors.
• The universe of stocks will comprise majorly of companies having robust business models, enjoying sustainable competitive advantages as compared to their competitors and have high return ratios.
• The Fund Manager will endeavour to create a robust portfolio to avoid concentration risk and liquidity risk. The Fund Managers will monitor the trading volumes in a particular stock before investment to avoid liquidity risk.
• 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 core and tactical approach with active monitoring.

The investment objective of the scheme is to provide long-term capital appreciation from a portfolio investing predominantly in Indian equity and equity related securities of midcap companies. From time to time, the fund manager may also participate in other Indian equities and equity related securities for optimal portfolio construction. There is no assurance that the investment objective of the Scheme will be realized.

Suggested investment tenure is 5– 7 years+.

The risk profile of Mirae Asset 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 midcap stocks.
• Investors with long investment horizons, at least 5 to 7 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.1,250 Crores, 1.60% for the next Rs. 3,000 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 2.00% per annum means that, each year 2.00% 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 scheme. 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%.

• Historical performance data across the different market cap segments show that midcap stocks have the potential to outperform large cap stocks over long investment horizons.
• Further, midcap stocks tend to be under-researched compared to large cap stocks and hence not priced efficiently. Fund managers have the opportunity to find such stocks with strong earnings growth potential available at a significant discount to their intrinsic value (margin of safety). Such stocks has the ability to deliver high alphas for the fund managers.
• Midcap funds are less risky compared to small cap funds but have high growth opportunities over large cap funds.
• Can help meet long term financial goals as midcap stocks can provide higher alpha than large cap stocks in the long term. But the investor should be ready to take moderately high risk.

Investors can participate in the growth of mid-sized companies which have the potential to be tomorrow's large companies with the potential of wealth creation for the investor.Some of the other schemes managed by the same fund manager (e.g. Mirae Asset Emerging Bluechip, Mirae Asset Great Consumer Fund) are among the top performing funds in their categories. The fund has been able to outperform its benchmark Nifty Midcap 100 TRI since inception.

The fund’s returns are subject to market risks. Midcap funds are usually more volatile than large cap funds. The returns of the funds can even be negative depending on market conditions. Past performance of the fund may or may not be sustained in the future.