The Hindu Business Line : PruICICI Power: Invest

PruICICI Power has been a consistent performer in the diversified equity fund category for the last five years. Investors can consider adding this fund to their portfolio. Since the market is likely to be highly volatile and range-bound, you can consider routing your investment over the next twelve months through a systematic investment plan. This reduces the downside risk that could arise out of bad timing of investment.

Though the name suggests that it is a thematic fund, PruICICI Power invests across a range of sectors. It, however, takes focused exposures in stocks; the top ten stocks account for close to 40 per cent of its total assets, with about 9 per cent invested in Reliance Industries.

Suitability: The fund invests predominantly in large-cap stocks, with less than 10 per cent in stocks with a market cap of less than Rs 2,000 crore. The presence of mid-caps helps to pep up returns. The fund has a risk profile similar to a typical diversified fund.

Performance: In the one-year period to April, the fund delivered an annualised return of 110 per cent, outpacing the benchmark index, Nifty, by more than 25 percentage points. In this period, its performance trailed the Nifty and the BSE-500 in just three out of twelve months. Over a five-year period, PruICICI Power delivered an annualised return of 47 per cent. Interestingly, an investment through the SIP route would have delivered as much as 60 per cent.

The portfolio features a sizeable allocation to Reliance, TCS, and BHEL. The top three sectors — industrial capital goods, cement and petroleum — account for 35 per cent of the total assets. The fund has pared exposures to the banking sector, booking profits partially in stocks, such as State Bank of India and Punjab National Bank.The fund holds 55 stocks in its portfolio. Average price earning multiples for the portfolio was around 25 by end April, in line with the broad market valuations at that time. Valuations are likely to look more attractive following the recent market meltdown.

The fund's bias towards large-caps might help it weather a protracted bear phase better.

Fund facts: PruICICI Power was launched in 1994 as a close-end product and later converted into an open-end fund. The fund manages about Rs 1360 crore, and Mr Anil Sarin is the manager. The entry load is 2.25 per cent and the minimum amount for a one-time investment is Rs 5000.

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