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S. Vaidya Nathan

INVESTORS in the Prudential ICICI Growth Fund can pare exposures in the wake of the indifferent performance over the past year in comparison to several of its peer funds.

While it has kept ahead of the narrow indices such as the Nifty and the Sensex, over the past six months, the magnitude of outperformance vis-à-vis the indices has narrowed. In this backdrop, a switch to diversified funds with a superior track record may be appropriate.

Prudential ICICI Growth Fund has a distinct bias towards large-cap stocks; mid-cap stocks account for about 20 per cent of its asset base. The presence of the mid-cap stocks has not pushed returns higher.

The fund's sector-specific preferences appear to have played a role in dampening the returns. Barring information technology, the other preferred sectors in the portfolio have not fared well.

Over the past year and a half, funds such as HDFC Equity, Franklin Bluechip, HSBC Equity and Templeton India Growth, which have a similar portfolio profile, have fared better. If one considers the performance over a longer time-frame, too, these funds boast of a considerably superior performance.

Prudential ICICI has performed well in bullish phases. Its performance across various phases of the market has not matched most of its peers; quite a few of them have also had to deal with sharp spurts in their asset bases.

Suitability: This fund has a diversified business profile and its risk profile is in line with other equity funds. The risk-return equation could be better. The dividend option is superior on tax efficiency as the dividends are exempt from tax.

Portfolio overview: The portfolio is dominated by stocks that figure in the Nifty. The key mid-cap stocks that dot the portfolio are Dishman Pharmaceuticals, Nicholas Piramal, NDTV, Vijaya Bank, Lupin Labs, Sesa Goa, Divi's Labs and Automotive Axles.

Barring Dishman, the rest are unlikely to have contributed to the performance significantly this year. Apart from Infosys, which accounts for about 10 per cent of the assets, the allocation to individual stocks is at or less than 5 per cent.

Fund facts: Prudential ICICI Fund was launched in January 1998. The minimum investment amount is Rs 5,000. The entry is 2 per cent. There is no exit load. The fund manager is Mr Krishna Kumar.

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