Should One Consider Investing in the Mirae Asset Tax Saver Fund?
Investing Rs 5,000 monthly in the Mirae Asset Tax Saver Fund over the last five years would have accumulated a corpus of Rs. 4.5 lakh, with an impressive annualised return of 16.46%. However, the fund's performance in 2021 and 2022 was not consistent.
Performance Overview
- 2021: The fund delivered strong performance with returns around 35.3%, indicating above-average growth.
- 2022: Essentially flat or slightly negative returns (0.1% or around -3 to -9.7%) indicated poor performance compared to 2021.
Compared to its peers and benchmark, the fund underperformed during 2022, showing less resilience than other funds in the same category.
Comparison with Peers and Benchmark
The Mirae Asset Tax Saver Fund's Beta (~0.93) and Sharpe ratio (~0.98) indicate moderate risk and risk-adjusted returns. However, these metrics do not fully address the underperformance peaks during market corrections.
In 2025, the fund was rated “3” in Crisil rank, but it showed lower trailing 1-year returns than some other Mirae Asset schemes like Large & Midcap or Midcap funds.
Factors Contributing to Underperformance
The fund's portfolio is heavily concentrated in sectors like Financial Services, Consumer Cyclical, Industrials, and Technology. If these sectors underperformed in 2022 due to macroeconomic or sector-specific headwinds, it could explain weaker returns.
2022 saw significant volatility and inflation concerns globally, which may have impacted Indian equity markets and especially the sectors held by the Mirae Asset Tax Saver Fund.
The fund's high-risk profile, with a maximum fall of -41.01% and a long recovery time, also makes it vulnerable to market downturns. Its investment in mainly large and mid-cap domestic equities exposes it to market volatility and sectoral cycles.
The fund manager's approach to stock-picking, following the GARP (growth at reasonable price) method, hasn't been effective in the last two years as the value theme has become more prominent.
Looking Ahead
The underperformance of the Mirae Asset Tax Saver Fund in the last two years has not been significant, but investors may want to consider switching to a better-performing fund if the underperformance persists. The Jensen's alpha for the Mirae Asset Tax Saver Fund is 1.25 against the category average of 1.63, indicating the fund is unable to deliver higher risk-adjusted returns than its peers.
In a one-year time frame, the average rolling returns for the Mirae Asset Tax Saver Fund are better than the category average and the benchmark returns. In a three-year time frame, the average rolling returns are also better than the category average and the benchmark.
The fund primarily invests in equity, providing potential for high returns but also exposing it to market volatility. The fund manager holds around 67 stocks against an average of 49 stocks held by peers, providing diversification benefits but possibly contributing to underperformance in the last two years.
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- Despite the impressive long-term return, the performance of the Mirae Asset Tax Saver Fund in personal-finance terms has been less consistent recently, with moderate risk (as indicated by its Beta and Sharpe ratio) and underperformance compared to peers and benchmark in 2022.
- For individuals focusing on personal-finance investing, understanding the fund's heavy concentration in specific sectors, its high-risk profile, and the underperformance in the last two years could be important factors to consider before investing in the Mirae Asset Tax Saver Fund.
