Equity Mutual Funds Recommendations For January 2021

(Note: Returns less than 1 year are absolute; Returns greater than 1 year are CAGR; AUM is as on November 2020; Returns are as on December 31, 2020) 
Source: ACE MF

Mirae Asset Large Cap Fund : 
It is an equity fund that primarily invests (at least 80% of AUM) in top Nifty companies by market capitalization. Remaining 20% is invested in high conviction mid cap ideas.  The key investment strategy involves investing in high quality businesses available at a reasonable price and holding the same over the period of times. Thus, the scheme focuses to identify companies which have sustainable competitive advantage in their space and therefore have strong pricing power.
 

• As of November 2020, the fund had invested 86% of AUM in large cap stocks while 11% was invested in mid cap stocks. 
• The fund had highest allocation to Banks (25.8%) followed by Information Technology (12.8%).
• Its top stock holdings consist of HDFC Bank (11.2%) followed by Reliance Industries (9.0%) and Infosys (8.3%).

Investors who prefer to invest in a diversified portfolio of blue chip stocks can invest in this fund to create wealth in the long term. This scheme is suitable for investors with moderately high risk appetite and at least 5 years of investment horizon. 

IIFL Focused Equity Fund

Focused category mutual fund schemes aim to generate superior return through a concentrated portfolio of equity & equity related instruments. IIFL Focused Equity Fund’s key objective is to generate long term capital appreciation from a portfolio of equity & equity related securities by investing in maximum 30 stocks of various market capitalisation.

The scheme follows multi-cap approach with orientation towards large cap companies. Its stock selection criteria is based on three attributes viz. (1) companies which are prime beneficiaries of secular growth, (2) companies which are poised for strong uptick in performance due to cyclical upturn, (3) defensives which are poised for higher growth. 
 

• As of November 2020, the fund had invested 67% of AUM in large cap stocks while allocation to mid cap and small cap stocks was 16% and 14% respectively.
• The fund had highest allocation in Banks (20.2%) followed by Pharma (12.4%). 
• It top holdings consist of ICICI Bank (9.7%) followed by HDFC Bank (6.7%) and Infosys (5.6%).

Investors with moderately high risk appetite and an investment horizon of at least 5 years, can look to invest in this scheme to accumulate wealth in the long run. 

UTI Equity Fund

The fund aims to generate long term capital appreciation by investing predominantly in equity and equity related securities of companies across the market capitalisation. The scheme focuses on high quality businesses that have an ability to show strong growth for a long period of time and are run by seasoned managements. The fund follows a bottom up stock selection with well-defined metrics of free cash flows, capital efficiency and ability to compound earnings
 

• As of November 2020, the fund had invested 64% of AUM in large cap stocks while 28% was invested in mid cap stocks. 
• The fund had highest allocation to Banks (15.2%) followed by Information Technology (14.2%)
• Its top stock holdings comprise of Bajaj Finance (7.0%), HDFC Bank (6.3%) and Kotak Mahindra Bank (5.1%)

Investors who prefer to invest in a diversified portfolio of stocks can invest in this fund to create wealth in the long term. This scheme is suitable for investors with moderately high risk appetite and at least 5 years of investment horizon. 

Axis Midcap Fund

It is an equity based fund that aims to generate capital appreciation by actively managing a diversified portfolio of a mid cap stocks, that is the companies ranked from 101st to 250th by market capitalization. The fund looks to identify and invest in midcap companies that have the potential to deliver superior returns due to potential of faster earnings growth.
 

• As of November 2020, the fund had invested 71% of AUM in mid cap stocks, while 24% was invested in large cap stocks. 
• The fund had highest allocation to Pharma (11.4%) followed by Banks (10.3%).
• The scheme’s top holdings comprise of Cholamandalam Investment & Finance (4.9%), PI Industries (4.4%) and Voltas (4.0%).

Investors looking for inflation-beating superior returns in the long run can invest in this scheme. Mid cap funds are suitable for those investors who have high appetite for market volatility and investment horizon of 7-8 years. 

Nippon India Small Cap Fund

The scheme predominantly invests in equity and equity related instruments of small cap stocks, that is the companies ranked 251st and beyond by market cap. The scheme identifies small cap companies which are mid-caps of tomorrow and offer dual advantage of high growth prospects and relatively low valuation. Thus ,the fund focuses on good growth businesses with reasonable size, quality management and rational valuation. 
 

• As of November 2020, 78% of its AUM was invested in small cap stocks while 12% was invested in mid cap stocks. 
• It has highest allocation to Chemicals (7.6%) followed by Auto Ancillaries (6.3%).
• The fund’s top stock holdings comprise of Deepak Nitrite (4.6%), Navin Flourine (3.3%) and Tube Investments (3.1%).

Investors who are seeking to invest in a diversified portfolio of small cap stocks and desire for risk adjusted returns in the long run can invest in this scheme. This open ended scheme is relevant for investors who have high risk appetite with investment horizon of 8-10 years.