Mutual Funds

ICICI Pru Balanced fund - Invest

K. Venkatasubramanian | Updated on October 06, 2012

IW07_Spotlight 2 ICICI Pru Bal.eps

The fund has ensured the right balance between momentum-driven and value-based stocks.

Investors can buy units of ICICI Pru Balanced fund in the light of its steady track record. Over one-, three and five-year periods, the fund has managed to outperform its benchmark — Crisil Balanced — consistently. The level of outperformance has ranged from marginal to as high as 6 percentage points.

ICICI Balanced has witnessed a significant improvement in performance over the past 3-4 years. Its returns of 11.4 per cent annually over the past three years place it among the top few funds in the equity-oriented balanced funds category. It has outpaced peers such as DSPBR Balanced, UTI Balanced and FT India Balanced over this period.

The fund takes significant exposure to mid-cap stocks in its portfolio. But this risk is tempered with substantially higher debt and cash holdings as well as by restricting the level of exposure to individual stocks. It has done well by participating in rallies and also adequately managing downsides during market corrections over the past few years.

ICICI Balanced is suitable for investors with low to moderate risk appetite. It can be added as a diversifier.

Investors can also take the SIP (systematic investment plan) route.

Portfolio and strategy

ICICI Balanced takes exposure to mid-cap stocks (less than Rs 7,500 crore market capitalisation) to the tune of 20-25 per cent of the portfolio. Though this may increase the risk profile of the fund, with it taking exposure to debt and cash to the extent of 30 per cent of its portfolio, the risk levels are fairly tempered.

Banks and software have always figured among the top few sectors held by the fund in the last 3-4 years, which were favoured by the markets. Auto ancillary, pharma and consumer non-durables also figure prominently among the top sectors invested in by the fund. By keeping defensive sectors at appropriate levels, the fund has ensured the right balance between momentum-driven and value-based stocks.

Over the last one year, ICICI Balanced has invested in an interesting set of stocks and has reaped the benefit. By taking exposure to stocks such as Balkrishna Industries, VST Industries and IPCA Labs, the fund has managed to latch on to the stupendous rally such shares witnessed over the past one year. Exposure to individual stocks is kept well within five per cent, barring a couple of them.

The debt portion of the fund is a mix of safe bets and a set of investments that are a little more risky, so that the overall returns are perked up.

ICICI Balanced invests in AAA corporate debt instruments of HDFC, Reliance Capital and Tata Sons. In addition, instruments rated AA, AA+ and even A+ have been invested in. The list includes Shriram Transport Finance, Indiabulls Financial Services, Prism Cement and Bajaj Finance, among others.

The NAV per unit of the growth option is Rs 52.9.

Published on October 06, 2012

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