Even as the markets touch new highs, there is volatility, especially in the mid-cap segment.

Hence, a large-cap stocks tilt would still be advisable in the light of the stability in these companies’ earnings and the visibility in their revenues.

Investors looking for steady returns and outperformance over the benchmark can consider buying the units of ICICI Pru Top 200, a large-cap fund with a reasonable track record. The fund invests in stocks from the BSE 200 (its benchmark) universe. A good portion of the scheme is made up of stocks from the Nifty basket.

Over one-, three- and five-year time frames, the fund has outperformed the BSE 200. The level of outperformance has been to the tune of 4-5 percentage points over the long term.

The fund was earlier called ICICI Pru Power and had a mandate of investing in core sector stocks. It was renamed and its mandate bradbased, a few years ago.

In the last five years, ICICI Pru Top 200 delivered compounded annual returns of 16.3 per cent, which places it in the top quartile of funds in its category.

These returns are higher than those delivered by HDFC Growth, DSPBR Opportunities and Religare Invesco Equity. The scheme has managed to contain downsides slightly better than its benchmark during falls while ensuring reasonable participation during rallies, making it a safe bet.

It may not be a chartbuster but ensures stable performance over the long term of five-seven years.

Investors with a moderate risk appetite may consider ICICI Pru Top 200 as a diversifier to the portfolio. Investments can be considered in the fund through the systematic route to average costs and ride out volatility in the markets.

Portfolio and strategy

The fund generally maintains a cash and debt level of a little under 5 per cent most of the time. The debt levels in the portfolio are typically increased during volatile markets. Banks and software have remained its top segment picks over the past few years. The stakes in banks have been increased over the past one year, thus benefiting the fund. While pharma and consumer non-durables have seen significant reduction in allocation, petroleum products, construction and auto sectors have been accorded higher weightage.

A certain value focus also anchors its holdings in stocks across sectors. ICICI Pru Top 200 invests in large-cap stocks (greater than ₹7,500 crore market capitalisation) to the tune of over 80 per cent of its portfolio. Its exposure to mid-caps has increased in the last one year to around 15 per cent of its assets. Exposure is restricted to quality names, such as Bata India, TVS Motor, City Union Bank, Balkrishna Industries and CPCL.

The fund does churn its portfolio quite heavily, which may increase the expense ratio. But overall, the scheme may suit those who expect steady rather than spectacular returns.

social-fb COMMENT NOW