The Hindu Business Line : PruICICI Dynamic Fund: Invest

Investment can be considered in PruICICI Dynamic Fund based on its track record. The fund outpaced its benchmark Nifty on an average by 14 percentage points since its inception. The fund was launched close to the recovery of the broad markets in 2002 and in its first year the fund generated a hefty return of 98 per cent but still trailed its peers.

In the subsequent year, owing to a sizeable exposure to midcap stocks, the fund logged a drop in its returns. However, over the period of time, it has gradually restricted the exposure to the stocks with market capitalisation less than Rs. 2,500 crore to 30 per cent of the assets. This is one of the few funds that enjoy the flexibility to move completely from equity to debt. Since its launch, however, the fund is fully invested in equity and its exposure to cash and debt restricted to 10 per cent of the assets. The fund also churns its portfolio aggressively. PruICICI Dynamic is benchmarked against the Nifty while its mandate permits it to invest in stocks across the market capitalisation. This increases the overall risk profile of the fund, making it suitable for an aggressive investor expecting higher risk adjusted returns.

Performance: PruICICI Dynamic was among the handful of funds that delivered 50 per cent plus return in a highly volatile 2006. The returns generated through SIP (systematic investment plan) appear similar for one-year tenure and for a period of three years, it has outpaced the one-time investment made in the fund by a huge margin. Investors planning to invest in this fund as part of diversification can do the same through the SIP route to minimise the risk as it allows a review of their decision based on the performance instead of committing funds at one go.

Portfolio Overview: The fund has a well-diversified portfolio, with investments across 20 sectors. The top ten stocks accounted for 41per cent of the portfolio. PruICICI has capitalised on the current market theme and its exposure to software sector has almost doubled in the past quarter.

The fund has few small cap stocks in its portfolio such as Hyderabad Industries, Viceory Hotels and Lokesh Machines. The fund's annual portfolio turnover ratio is around 2.5 times, which implies that it churns its portfolio frequently.

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