ICICI Prudential Top 100: Invest :: Business Line

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Consistent performance across market cycles and ability to weather volatility make ICICI Prudential Top 100 a good investment opportunity to consider, from a three-to-five-year perspective. Investors with a moderate risk appetite may consider fresh investment in the fund.

The fund has managed to deliver returns higher than the benchmark — CNX Nifty — and its category average over one-, three- and five-year time frames. With a mandate to invest in prominent large-cap stocks, the fund is ideal for the core equity portfolio.

In the last three years, even as peer funds — Franklin India Bluechip and HDFC Equity — struggled, ICICI Pru Top 100 has managed to clock returns higher than the Nifty.

CONTAINS FALL

In the past, the fund has been successful in containing downside in a falling market. For instance, during the period January 2008-February 2009 when Nifty lost almost 55 per cent, the fund managed to arrest the slide in NAV to 50 per cent. Lower-than-benchmark exposure to power utility stocks helped performance. Similarly, reducing exposure to stocks such as State Bank of India, Suzlon Energy, NALCO and Tata Motors aided performance. The fund on an average held over 8 per cent in cash which also limited the downside risk.

In the last three years, the fund has consistently managed top quartile performance. During the period January 2012-August 2013, it gained over 29 per cent, which is four percentage points higher than its benchmark. Higher allocation to stocks in the oil and gas, healthcare and telecom space lifted performance. Increasing weight in fundamentally strong stocks such as Sun Pharma, Dr Reddy’s Labs, Bharti Airtel and Tech Mahindra boosted the fund’s NAV.

BEATS BENCHMARK

On a one-year basis the fund gained 4.1 per cent higher than the 2.7 per cent jump for Nifty. Similarly, on a three-and five-year basis it raked in 3.5 per cent and 7.9 per cent gains, compared with 0.5 per cent and 4.4 per cent increase for the benchmark.

Systematic monthly investment of Rs 1,000 in the fund over the last five years would have fetched returns in excess of 8.2 per cent annually.

The fund currently holds 39 stocks in its portfolio, with an average market capitalisation of over Rs 67,000 crore. Over 14 per cent of the scheme’s assets are invested in private sector banks such as ICICI Bank, Standard Chartered Plc and HDFC Bank. Given the skew towards IT and healthcare stocks, sustained weakness in the rupee against the dollar may also help the fund’s performance.