Often times, companies tend to face disruptions that can alter their business landscape considerably. An innovative new entrant that is fiercely competitive, sudden government regulations (domestic and overseas), managerial moves at the board or management level that result in conflicts, or even adverse lawsuits can hurt the best of companies, albeit temporarily.
These circumstances, generally referred to as special situations, often result in a stiff correction of stock prices of robust companies even. Such falls in prices often present attractive entry points for investors and fund managers, given the prospect of prices rallying sharply once the uncertainties blow away.
ICICI Prudential India Opportunities focuses on such companies and has delivered a robust performance since January 2019, when it was rolled out. By buying companies that have corrected or are close to the bottom of a declining phase due to temporary challenges, the fund has delivered superior returns. It could be likened to a blend of contrarian and value plays.
Though a diversified thematic scheme, its returns over the past four-plus years can be compared favourably with the best in the regular equity categories.
Here’s why the fund can be considered for your portfolio over the long term.
Consistently robust returns
ICICI Prudential India Opportunities has been around for a little under five years. We have previously recommended buying the fund in Feb-2021.
Over one, two, three and four-year timeframes, the fund has outperformed its benchmark – Nifty 500 TRI – on a trailing return basis. It has given 9-14 percentage points more than the Nifty 500 TRI across horizons, making it one of the best performing thematic equity funds across categories.
When we take 3-year rolling returns basis from the time of the fund’s inception (January 2019) till September 2023, ICICI Prudential India Opportunities has given mean returns of 28.3 per cent, while the benchmark has given only 13.9 per cent over the same period.
Again, on a rolling 3-year returns basis, from the fund’s inception till the present, the scheme has outperformed the benchmark all the time (100 per cent).
Three-year SIP investments made in the fund would have delivered a return (XIRR) of a healthy 30.81 per cent, while a 4-year SIP would have given a staggering 32.64 per cent return, according to data from Valueresearch.