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ICICI Pru Child Care Plan-Gift Plan delivered a one-year return of 77 per cent, the highest among equity-oriented balanced funds.
This return is a whopping 25 percentage points higher than the category average return of 51.5 per cent. With the equity markets on fire, the fund correctly timed the increase in equity allocations. While it held only the mandated minimum equity requirement of 65 per cent (for equity–oriented balanced funds) in August 2013, exposures rose to 75 per cent in the following months.
The fund also managed its debt portfolio well. As g-sec yields began stabilising at 8.4-8.8 per cent from the 9.2 per cent recorded in August last year, the fund slowly pared exposures on this front. It preferred short-term debt instead. Exposures to government securities have been halved to 8 per cent from the September 2013 levels.
Sector and stock choices
On the equity side, what’s interesting about the fund’s sector choices is that it avoided the cyclical theme dominating this bull run.
Stellar returns came about even as the fund gradually exited market favourites such as capital goods, construction and mining. The fund has not bet so much on auto and consumer durables either. It instead added on textiles and fertilizers. It hiked stakes in GE Shipping and offbeat stocks such as Siyaram Silks Nesco and KPR Mills, which have clocked hefty gains. Its 4 per cent exposure to Reliance Industries also helped.
That banking was among the top preferred sectors was an advantage, with bank stocks sprinting on hopes of higher economic growth. Holdings in this space are now at 20 per cent, compared to 8 per cent a year ago. Picks such as HDFC Bank, ICICI Bank, City Union Bank, ING Vysya, Bajaj Finserv and Repco Homes have paid off.
Software and pharma, though defensive bets, held the fund in good stead too. The fund played to its mandate of reducing risk in comparison with a diversified fund, by being less daring in its sector choices.
But it partly made up for this by taking 35 per cent exposure to mid-caps early on in this bull run, until end 2013.
Again, it gradually reduced mid-cap exposures since the beginning of this calendar year, bringing down the risk quotient.
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