'We look at long-term returns'

FUND MONITOR: S. Naren, Co-Head, equities, Prudential ICICI AMC

At Prudential ICICI, we follow a disciplined investment process to optimize risk adjusted return on our schemes consistently over a long term time period.

For the tax plan, the goal is to achieve good returns on a risk adjusted basis over a three-year timeframe. Hence, we look at long-term returns in the stocks.

The fund's allocation to small-caps seems to be on the rise. Your views.

Due to the three-year holding period of investors in the fund and the resultant low level of ad-hoc redemption in the fund, we took advantage of exposure to small and mid caps to maximize returns for our investor, which has worked well.

The investment style of the fund has been tilted towards mid and small caps because we believed that given a three-year time frame, mid-caps have a higher return potential and would outperform large-caps.

In anticipation of a growth in the fund's corpus size, we are looking at increasing our allocation to large cap stocks in our portfolio.

Historically the fund performance has been volatile. What's your view?

As the Tax Plan has traditionally been a fund with a three-year lock in period, we believe that volatility should be measured from a longer-term view and not a day-to-day view.

While taking investment decisions on the tax plan, we take a three-year plus view; hence we measure volatility of the fund with a three year period in mind and not daily.

You will note that the three-year return volatility of the fund is far lower than the volatility of the benchmark.