ICICI Prudential Top 100: Steady returns for the long term

Is the market volatility worrying you? Here’s one fund that can help you contain downsides during such turbulent times.

ICICI Prudential Top 100 has had a good track record of consistently beating its benchmark, the CNX Nifty.

Investors with a moderate risk appetite and an investment horizon of at least five years can consider investing a portion of their surplus in this fund, through the systematic investment route.

The fund scores over its large-cap peers such as UTI Top 100 and DSP Blackrock Top 100 on consistency. The scheme’s annual returns have been better than its benchmark, CNX Nifty, almost 89 per cent of the time in the last five years.

ICICI Prudential Top 100, on average, invests over 70 per cent of its assets in quality large-cap stocks. And this has helped the fund contain downsides better during market falls, in the past. During rally phases, the scheme has managed to deliver returns largely in line with the benchmark or marginally exceed it.

The scheme performance has been better than its benchmark and the category average over the last three and five-year periods.

Delivering long term Over the past year, however, the fund’s returns have been lower than Nifty and the category average. This was primarily on two counts. First, ICICI Prudential Top 100’s sector bets did not play out in the last one year.

The fund missed the opportunity in banking and financial stocks in the latter half of 2014 and early 2015, as it was underweight on stocks in this space. A late catch-up did not help performance. Similarly, the fund had placed big bets on cyclical themes — oil and gas, capital goods and materials — which marred performance.

Stocks in these themes — Cairn India, Jaiprakash Associates, Hindalco Industries, JSW Steel and Tata Steel — lost heavily in the past year, dragging the scheme’s NAV. Second, the fund’s mid-cap bets impeded performance over the last one year.

For instance, a steep fall in the price of stocks such as Aban Offshore, Great Eastern Shipping and McLeod Russel sent returns tumbling.

In the last few months, the fund has exited fundamentally iffy, momentum stocks such as Cairn India, SJVN, Cyient, Sun TV and SKS Microfinance.

Over the last six months, ICICI Prudential Top 100 Fund has increased exposure to cyclical themes such as financials and metals.

Similarly, it has reduced holding in defensive themes pharma and IT, though it added select FMCG stocks such as Tata Global Beverages and McLeod Russel to its portfolio.

Invest in it for steady returns over the long term.

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