The Hindu Business Line : ICICI Prudential Power: Invest

Investments can be considered in ICICI Prudential Power Fund, which invests in a diversified basket of large-cap stocks and has a marginal exposure to mid- and small-caps (market capitalisation less than Rs 5,000 crore). Based on its three- and five- year returns, the fund is a good investment option, as it outpaced its benchmark CNX Nifty by a huge margin.

Suitability: Despite being benchmarked against the Nifty, the fund actively invests in stocks outside the index basket; such stocks accounted for 50 per cent of the latest portfolio. However, the fund has remained large-cap focussed, investing 80-90 per cent of its assets in such stocks, with the rest in mid- and small-caps. This investment strategy makes for a higher risk profile than a pure large-cap fund; but investors looking for higher returns can consider exposure to this fund.

Performance: Given that the market was at relatively low levels last June, one-year returns on several funds now appear quite healthy. ICICI Power's NAV appreciated 47 per cent, against a 43 per cent gain on its benchmark Nifty. The fund's performance over this period is similar to peers such as HDFC Equity Fund and Reliance Vision Fund. The fund actively churns its portfolio, though about 15 stocks have stayed in the portfolio over the past year. The fund stepped up the exposure to banks, petroleum and media stocks between January 2007 and now.

Media stocks such as Deccan Chronicle, HT Media and Global Broadcast News, which performed well during this period, probably aided the fund's returns. On a rolling returns basis for the past 24 months, the fund outpaced its benchmark more than 60 per cent of the time.

Profile: The latest portfolio consists of 36 stocks and the top 10 account for 44 per cent of assets. One-third of the assets are invested in the top three sectors.

The fund at times takes concentrated bets, and stock-specific exposures have, at times, formed 10 per cent of the portfolio. This suggests a higher risk profile. The stocks that represent mid- and small-caps are Andhra Bank, AIA Engineering, Jain Irrigation and Gokaldas Exports.

Fund facts: The fund was launched in October 1994 and the fund manager is Mr Anand Shah. The assets under management are Rs 1,558 crore. Had an investor opted for an SIP of Rs 1,000 per month since its inception, his corpus at the end of May 2007 would have been at Rs 10.70 lakh. The fund's NAV per unit is Rs 88.85.

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