Mirae pivots to ETFs, discourages large flows to select funds

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Mirae Asset Mutual Fund, one of India’s largest active fund managers, has signalled a strong push towards passively managed exchange-traded funds (ETFs).

After launching multiple ETFs over the past few years, Mirae explicitly spelled out its push for passive funds at an online interaction on Friday.

The asset management company (AMC) launched a Nifty ETF in November 2018, a Nifty Next 50 ETF in January 2020, an environmental social governance (ESG) ETF in October 2020 and an equity allocator Fund of Funds in September 2020 feeding into ETFs. It is planning to launch a FANG+ ETF later this month.

However, at the online interaction, Swarup Mohanty, CEO, Mirae Asset MF, revealed that the AMC had spoken to large distributors to remove select active funds from banking platforms. “It is not the size of the funds per se but the rate of growth in them that we are concerned about,” Mohanty told Mint in a subsequent chat.

The three funds where the AMC is discouraging inflows are Mirae Asset Midcap Fund, Mirae Asset Taxsaver Fund and Mirae Asset Focused Fund on account of the rapid growth in their size. They have assets under management (AUM) of 4,224 crore, 6,934 crore and 5,472 crore, respectively.

The fund house stopped lump sums and capped SIPs in Mirae Asset Emerging Bluechip Fund (now classed as a large- and mid-cap fund) to 25,000 per month in October 2016. The SIP cap was brought down to just 2,500 for SIPs registered after 6 November 2020.

Emerging Bluechip has assets of 16,190 crore and has outperformed its benchmark and category average over the past one, three and five years. The outperformance has come even in the past year when active funds struggled to outperform.

“You cannot ignore the underperformance of actively managed funds on average that the SPIVA and Morningstar reports have thrown up,” said Mohanty. The latest SPIVA report released by S&P Dow Jones Indices shows that 81% of actively managed funds underperformed indices in the large-cap category.

However, Mohanty did not unequivocally take the side of ETFs when asked whether investors in active funds should shift to them.

“As an asset manager, we are neutral to both. We leave that decision to the distributor or adviser,” added Mohanty.

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