ICICI Prudential Focused Bluechip Fund: Invest

Worried about the sustainability of the current rally? Here’s one large cap fund which can shield your investment during volatile times, but also deliver higher returns over the long term.

ICICI Prudential Focussed Equity may not figure in the top pile on a one-year basis, but its returns over the last five years have been higher than its benchmark, the Nifty, 96 per cent of the time.

Despite the fund’s performance slipping to mid-quartile levels on a one-year basis, it has managed to sustain its position among the top schemes in the category on a three- and five-year basis. Its performance over the long term has been better than its peers – HDFC Top 200, Principal Large Cap, UTI Top 100, and SBI Magnum Equity. Investors with a three-to-five year investment horizon can consider buying the units of ICICI Prudential Focused Bluechip Fund.

The fund has an unswerving track record of containing downsides during corrective phases since its launch in May 2008, despite taking concentrated sector calls at different points in time.

A systematic investment in the fund since its inception would have yielded annual returns in excess of 20 per cent.

ICICI Pru Focused Bluechip would continue to be a suitable addition to the core portion of investors’ portfolios. Periodic investments over the long term are expected to pay off well for investors in this bluechip fund.

The fund is currently betting big on cyclical themes, so its prospects are directly correlated to the country’s economic recovery. For instance, the fund has invested a third of its assets in financial stocks. The recent underperformance by these stocks due to historically low credit off-take by India Inc and asset quality concerns weighed on the fund’s performance over the last nine months. However, a recovery in the economy and resultant improvement in credit growth, as well as moderation in interest rates with a fall in inflation will drive the next leg of rally in financials. Lower exposure to defensive themes — pharma and IT — impacted the fund’s returns over the last six months. ICICI Pru Focused Bluechip does stick to investing in the Nifty pack for the bulk of its portfolio. However, the scheme’s outperformance vis-à-vis its benchmark has widened in the last three months, thanks to the strong rally in auto stocks such as Tata Motors DVR, Bharat Forge, Motherson Sumi and pharma stocks Cipla and Dr Reddy’s.

Currently, the fund holds 49 stocks in its portfolio, which reduces the concentration risk.

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