Looking for a fund that will help you stay the course even during volatile phases? ICICI Prudential Focused Bluechip is one fund you can consider. The fund’s mandate to invest most of its assets in large-cap bluechip stocks lends stability to performance even during down cycles.

The fund has managed to outperform its benchmark Nifty 50 Index by 5-6 percentage points across time periods — one, three and five years. It has delivered annualised returns in excess of 14 per cent since its inception in May 2008.

Investors with a moderate risk appetite and investment horizon of five years can consider parking a portion of their surplus in this fund for three reasons.

First, the fund scores high on consistency. The scheme’s daily one-year return has been higher than its benchmark almost 95 per cent of the time, in the last five years.

This is higher than other large-cap focused peers such as Franklin India Bluechip Fund, HDFC Top 200 Fund and L&T Large Cap Fund.

Limits downside

Second, thanks to the large-cap slant and its strategy to stick to high-quality stocks, the fund, in the past, has managed to contain fall in its NAV well during market falls. Sample this.

Likewise, during the January-August 2013 period, when the Nifty 50 Index shed over 13 per cent, the fund managed to contain the decline in NAV at 11 per cent. Besides downside containment, the fund has been able to deliver benchmark beating returns, even if not best-in-class returns, during relief rallies that followed the corrective phases.

For instance, during the August 2013-March 2015 period the scheme raked up 83 per cent gains, much higher than the 70 per cent jump in Nifty 50 Index.

Third, the scheme’s expense ratio is lower than the category average and this has also aided returns. The current expense ratio of 2.16 per cent is lower than peers’, such as Franklin India Bluechip (2.21 per cent), Principal Large Cap Fund (2.56 per cent) and DSP Blackrock Top 100 Fund (2.3 per cent).

In the last six months, the fund has increased exposure to stocks in cyclical sectors such as financials, oil and gas and metals and minerals. This should help the fund over the medium to long term, once the economy stabilises. About a fourth of its assets are currently parked in the less volatile themes such as FMCG, pharma and IT.

While the fund has added FMCG and pharma stocks, it has reduced exposure to IT stocks since March 2016.

While the fund can be a good bet to contain losses during bear phases, given that the volatility is unlikely to abate soon, one can consider the SIP route to investing in the fund.

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