 "Fund Pick: ICICI Prudential Value Discovery Fund")
Launched in August 2004, ICICI Prudential Value Discovery Fund is classified under the diversified category of CRISIL Mutual Fund Ranking, and has been ranked No. 1 for the past four quarters ended December 2015.
The primary objective of the fund is to generate returns through a combination of dividend income and capital appreciation by investing primarily in a well-diversified portfolio of value stocks.
The fund, being managed by Mrinal Singh since February 2011, had a quarterly average assets under management (AUM) of Rs 10,664 crore at the end of December 2015 quarter.
Superior performance
The fund has outperformed its benchmark (S&P 500) and category (represented by diversified funds under CRISIL Mutual Fund Ranking), across all timeframes. Although over the past one year, the global economic slowdown has affected its performance, the fund has managed to consistently deliver promising returns over longer timeframes - two, three, five, seven and 10 years. (see chart).
After the sub-prime crisis, the fund has outperformed its benchmark and the category during bull and bear phases. During the post sub-prime crisis phase (April 2009 to December 2010), it has delivered phenomenal returns (90.60 per cent annualised) compared to its benchmark (59.18 per cent annualised) and the category (63.55 per cent annualised), respectively.
An investment of Rs 1,000 in the fund at inception would have appreciated to Rs 9,828 (annualised return of 21.99 per cent) as on February 12. Similar investments in the category and benchmark would have grown to around Rs 6,744 (18.06 per cent) and Rs 4,487 (13.95 per cent), respectively.
A monthly investment of Rs 1,000 since inception (principal of Rs 1.39 lakhs) via a systematic investment plan (SIP) would have grown to Rs 4.36 lakh by February 12. A similar amount invested in the benchmark would have grown to Rs 2.32 lakh (see table).
Over past three years (ended January 2016), on an average, the fund has held 63 stocks, which indicates a well-diversified portfolio. Between January 2014 and January 2016, exposure to large-cap stocks has grown substantially from 26.66 per cent to 67.96 per cent, thus paving the way towards building a more diversified portfolio.
The top five sectors, as of January 2016, comprised 45.52 per cent of the portfolio. Highest allocation was to banks (17.47 per cent), followed by construction projects (12.05 per cent), software (9.14 per cent), power (8.13 per cent) and automobile (6.51 per cent).
Over past three years the fund has consistently held 28 stocks, with average exposure at 44.75 per cent. Of these stocks, ICICI Bank had the highest average exposure of 4.20 per cent, followed by Amara Raja Batteries (3.05 per cent), PI Industries (2.63 per cent), Sadbhav Engineering (2.50 per cent) and Mindtree (2.20 per cent).
