The Hindu Business Line : PruICICI Power: Invest

An investment can be considered in PruICICI Power, a top performer among large-cap funds over the past year. It also enjoys a good track record over three- and five-year periods and ranks well in consistency of performance and coping well with volatile market phases. Investments can also be considered in phases to minimise the impact of poor timing.

Suitability: The fund has a large-cap tilt. While the Nifty is its benchmark, the fund does invest in stocks that fall in the emerging large-cap category (stocks with a market capitalisation of Rs 2,000-5,000 crore).

Going by its latest portfolio fact-sheet, as much as 50 per cent of its portfolio is invested in stocks outside of the Nifty. This lends it a higher risk profile than a fund that closely tracks the benchmark, such as Franklin Bluechip or HSBC Equity. However, investors who have held on to the fund over the past year would have been compensated for the risk assumed.

Performance: PruICICI Power has delivered a return of 47 per cent over the past year, beating its benchmark by more than 10 percentage points and even the Sensex by about three percentage points. It beat the Nifty in eight out of 12 times over the past year.

It also withstood the market correction fairly well, increasing cash levels between May and July. While this could have helped it buy stocks at attractive levels, the cash may have acted as somewhat of a drag over the past six months. Its returns over this period just about match that of the Nifty.

The portfolio is actively managed and the sector composition has changed since May, when capital goods, banks and cement were the top three sectors. In the May-September period, holdings in sectors such as petroleum and cement helped performance.

The fund, which was underweight in software in May, also steadily increased its exposure to the sector from 1.5 per cent in May to 11.3 per cent in October. Now, consumer goods and software are the top holdings, while exposure to banking and petroleum sectors have been trimmed.

Stocks such as Deccan Chronicle, Thermax, JP Associates and Century Textiles, which do not belong to the Nifty index, have been prominent holdings. These stocks have delivered handsome returns over the past year.

Portfolio overview: The fund has an asset base of about Rs 1,500 crore. The portfolio is well diversified, consisting of about 50 stocks. The top ten stocks account for about 40 per cent of the assets. The top three holdings account for about a third of the portfolio.

About 70 per cent of the portfolio is invested in stocks with a market capitalisation greater than Rs 5,000 crore. About 10 per cent is invested in small-cap stocks such as Ballarpur Industries, Triveni Engineering, Plethico Pharmaceuticals, Gokaldas Exports and Usha Martin.

Fund facts: PruICICI Power was launched in 1994 and has delivered an annualised return of 18.5 per cent since. The fund manager is Mr Sankaran Naren. The NAV is Rs 79.13.

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