Dynamic fund allocation: ICICI Prudential's rocket fuel for outpacing peers

ICICI Prudential Large & Mid Cap Fund, launched in July 1998, has featured in the top 30 percentile of the large and midcap fund category of the CRISIL Mutual Fund Ranking (CMFR) for three consecutive quarters through December 2023.

Ihab Dalwai has been managing the fund since June 2022. The fund’s month-end assets under management more than trebled to Rs 12,307 crore in March 2024 from Rs 3,726 crore in March 2021.

The fund targets long-term capital appreciation from a portfolio predominantly invested in equity and equity-related securities of large and midcap companies.

Trailing returns

The fund has outperformed the benchmark (National Stock Exchange Nifty LargeMidcap 250 TRI) over the two-year, three-year, and five-year trailing periods and its peers (funds ranked under the large and midcap fund category in CMFR in December 2023) over the one-year, two-year, three-year, five-year, and seven-year trailing periods.

An investment of Rs 10,000 in the fund on April 1, 2005 (the inception of the benchmark) would have grown to Rs 1.9 lakh (an annualised return of 16.74 per cent) on April 10, 2024. In comparison, the same investment in the category would have grown to Rs 1.87 lakh (an annualised return of 16.63 per cent), and in the benchmark to Rs 1.84 lakh (16.54 per cent).

A systematic investment plan (SIP) is a disciplined mode of investment offered by mutual funds, wherein one can invest a certain amount at regular intervals.

A monthly investment of Rs 10,000 for the past seven years, totalling Rs 8.4 lakh, in the fund would have grown to Rs 18.43 lakh (an annualised return of 22.39 per cent), compared with Rs 17.67 lakh (21.19 per cent) for the benchmark as of April 10, 2024. Overall, the fund has outperformed the benchmark in SIP periods of one, three, five, and seven years.

Portfolio analysis

In the past three years, the fund has dynamically managed its allocation across market capitalisations. It maintained an average allocation of 52.97 per cent to largecap stocks, 36.32 per cent to midcap stocks, and 5.72 per cent to smallcap stocks.

The portfolio was diversified across 18 sectors. Financial services had the highest average allocation of 30.3 per cent, followed by energy (13.03 per cent), automotive (8.21 per cent), information technology (7.75 per cent), and telecommunications (7.62 per cent).

The fund had exposure to 188 stocks. NTPC, Bharti Airtel, TVS Motor Company, Hindalco Industries, and ICICI Bank contributed significantly to the fund’s performance and were among the 14 stocks held consistently.