Mutual Funds

Top of the heap on consistency

Anand Kalyanaraman | Updated on May 11, 2014


The fund has been able to latch on to good stocks before they catch the market’s fancy

Looking for a tried and tested large-cap investment? Buy units of ICICI Prudential Top 100 fund — a consistent winner. A value-driven investment style helps ICICI Prudential Top 100.

The fund has been able to latch on to value picks before they catch the market’s fancy. Its returns have comfortably beaten the category average and the fund has figured among the top quartile in the last couple of years. The fund is consistent, too; annual rolling returns have been higher than that of the Nifty more than 82 per cent of the time over the last five years.

Its annualised return since inception in 1998 is an enviable 20 per cent. Its one-, three- and five-year annualised returns have beaten the benchmark Nifty’s returns by 3-11 percentage points. The fund has also capped its downsides well, though participation during upswings has not been spectacular.

Over the last three years ICICI Pru Top 100 delivered annual returns of about 12 per cent, ahead of peers such as DSP BlackRock Top 100 and UTI Top 100.

ICICI Pru Top 100 is suitable for moderate risk-takers. Though not in the league of ICICI Pru Focused Bluechip, the scheme can be a suitable diversifier to an investor’s portfolio.

Deft moves

Over the past year, it gradually increased its exposure to cyclical sectors such as power, banks, auto components, cement and construction. With stocks in these sectors doing well over the past few months on expectations of an economic pick-up, the fund has benefited. Exiting from sharply run-up consumer stocks such as Nestle India has also stood the fund in good stead. The fund’s focus on buying cheap is reflected in its valuation metrics — at 16 times, its current price-to-earnings ratio is far below the category average of 23 times.

Similarly, multi-baggers such as Dr Reddy’s Labs, TCS and ING Vysya aided ICICI Pru Top 100’s performance over the last five years. But the fund has erred too. For example, it pared holdings in stocks such as Sun Pharma which has gained sharply over the past five years. That said, the fund’s right moves more than offset the wrong steps.

Currently, ICICI Pru Top 100’s largest holding (23 per cent of portfolio) is in banks, likely beneficiaries if economic growth picks pace. The scheme picked up in performance after 2011, after which it has been quite consistent. Invest in it with a five-seven-year time horizon.

Published on May 11, 2014

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