The Hindu Business Line : ICICI Prudential Indo Asian Equity: Hold

Diversification within an asset class can minimise risk for equity investors and with the Indian market entering turbulent times, funds that invest in stocks outside India help tide over market volatility and insulate themselves against purely India-specific risks.

The ICICI Prudential Indo Asian Equity Fund is an open-ended equity fund with a mandate to invest 65 per cent in domestic companies and the rest in stocks from the Asia-Pacific region as well as the International Opportunities Fund Asian Equity Fund. The fund was launched just a few months before the market peaked in January and has since deployed its assets in the domestic market as well as overseas.

During the market meltdown, the fund has fared better than its peers and Indian benchmarks such as the Sensex. The fund sports a year-to-date decline of about 27 per cent in its NAV, against the 36 per cent decline recorded by the diversified funds category.

However, given that the fund was still in the deployment phase at the beginning of the correction, this may not be indicative of future performance.

Unit-holders can retain their investments in ICICI Prudential Indo-Asian Equity Fund as a diversification move. It is advisable to wait and watch performance before committing any fresh funds.

Performance: Select international funds contained their declines during the recent market meltdown pretty well.

Many of the global theme-based funds have shed 10-15 per cent over a six-month period. Standout performers in this category were Birla Sun Life International Equity Plan A and Fidelity International Opportunities. ICICI Pru Indo Asian Equity Fund lost about 11 per cent in value in six months.

Portfolio Overview: The fund has invested 70 per cent of the assets in domestic equity and other instruments and 30 per cent in the International Opportunities Fund Asian Equity Fund.

The fund had 29 stocks in the August portfolio, the top ten accounting for 39 per cent of assets.

In the domestic portion, the fund has invested 80 per cent of the assets in large-cap stocks (with a market capitalisation above Rs 7,500 crore). Capital goods, banks and software were preferred sectors, accounting for 30 per cent of the assets. In the large-cap space, the fund held stocks such as Reliance Industries, Infosys Technologies and Bharti Airtel.

Ahluwalia Contractors, Texmaco and Karur Vysya Bank were some of the mid-cap holdings.

Fund facts: The fund was launched in October 2007 and is jointly managed by Mr Sankaran Naren and Amit Mehta.

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