Mirae Asset Mutual Fund has announced a new fund offering (NFO) for Mirae Asset Savings Equity Fund. Equity Savings Funds allow investors to benefit from the favourable tax treatment of equity investing without taking the full risk of equity investing. This is because a portion of the fund’s equity exposure is hedged away. The new open-ended scheme will invest in equity, debt as well as arbitrage (to hedge equity exposure). The NFO will open for subscription on November 26 and will close on December 10, 2018. The scheme will reopen for continuous sale and repurchase of units on December 18, 2018.
Under normal circumstances, the scheme will invest between 65 to 90 percent in Indian equities, out of which 20 to 45 percent assets would be invested in unhedged equities. An unhedged equity exposure means that investors are exposed to equity market movements up to 20 to 45 percent of assets. The balance equity amount is hedged and investors will not suffer from a market correction, to that extent. The scheme will also invest 20 to 70 percent in arbitrage, which will include cash-futures arbitrage, index futures and options, stock futures. Arbitrage is the process through which a mutual fund hedges its equity exposure. 10 to 35 percent assets will be invested in debt which will include high credit quality debt and money market instruments.
Mirae Asset Savings Equity Fund will be benchmarked against the Nifty Equity Savings Index. The returns for the benchmark index are as follows:*
| Index Name | 1-yr Returns (%) | 5-yr Returns (%) |
| Nifty Equity Savings Index | 7.75 | 10.31 |
*Returns data as of Sept. 30, 2018
Fund manager for the equity portion of the scheme is Sudhir Kedia and for the debt portion, the fund manager is Mahendra Jajoo. The other fund that Kedia and Jajoo manage together is the Mirae Asset Hybrid Equity Fund. Launched in July 2015, this fund has given return of 10.19 percent since its inception.
Last week, Sundaram Mutual announced the NFO for its equity savings fund. Other players that have equity savings schemes are HDFC, DHFL Pramerica, Kotak, ICICI Prudential. Three year returns for the HDFC Equity Savings Fund are 10.13 percent. ICICI Prudential Equity Savings Fund has three year returns of 8.38 percent. (As on Nov. 21, 2018)
Key information about the Mirae Asset Savings Equity Fund:
| NFO period | November 26 – December 10, 2018 |
| Minimum application amount | Rs. 5,000 |
| Exit load | 1 percent exit load, if units redeemed or switched out within one year of allotment date
No exit load thereafter |
| Benchmark | Nifty Equity Savings Index |
| Fund managers | Equity – Sudhir Kedia
Debt – Mahendra Jajoo |
Other Funds by Mirae Asset Management
| Scheme Name | 3Y Returns (%) | AUM (Rs. Cr.) | Category |
| Mirae Asset Emerging Bluechip Fund | 14.32 | 5447.63 | Large & Mid Cap Fund |
| Mirae Asset Great Consumer Fund | 17.07 | 339.57 | Sectoral/Thematic Fund |
| Mirae Asset Large Cap Fund | 12.94 | 7478.51 | Large Cap Fund |
| Mirae Asset Savings Fund | 6.83 | 373.76 | Low Duration Fund |
| Mirae Asset Cash Management Fund | 6.87 | 3352.03 | Liquid Fund |
| Mirae Asset Hybrid Equity Fund | 12.14 | 1183.13 | Aggressive Hybrid Fund |
| Mirae Asset Tax Saver Fund | 15.72 | 1001.56 | ELSS |
{Data as on Feb 19, 2020; Source: Value Research}