Considering scheme's past performance, investment philosophy and discipline it has shown, it is definitely recommended to invest in ICICI prudential value discovery fund.
ICICI Prudential Value Discovery Fund is a scheme that aims to invest in a well-diversified portfolio of value stocks. The fund aims to invest in companies that have attractive valuation in regards to their earnings or book value. The scheme is currently listed in the Small and Mid-cap fund category however this is due to its investment objective and not by design.
About the Fund:
The scheme was launched on 16th August 2004 by ICICI Prudential Asset Management Company and have an asset size of Rs 8075 crores as on 31st December 2014. The fund is being managed by Mr. Mrinal Singh since February of 2011. ICICI Prudential Value Discovery fund's investment strategy is to find companies that are currently small in size and have attractive valuation. The fund is benchmarked against CNX Midcap.
Portfolio Allocation:
Being a diversified equity fund it has exposure to all sectors. The highest allocation of around 19% being in financials sector followed by automobile (10.7%) and engineering (10.1%). The top 10 stocks make up 30% of the fund portfolio while the top 3 sectors make up 40% of the portfolio. As far as market cap is concerned largecaps make up approximately 45% of the portfolio with midcap and small caps making up 43% and 12% of the portfolio respectively.
Other Parameters:
The fund's standard deviation at 16.24 is much lower than the benchmark. It means the scheme has less market risk compared to the broader market. The beta of .93 means the volatility in the scheme is slightly lesser than the benchmark but not remarkable. Alpha of the fund is a staggering 14.68 that means the fund's performance can be attributed to the skill of the fund managers.
Performance:
ICICI prudential value discovery fund is currently making the news because of the exceptional return it has given over the last 10 years. The average return per year has been a mind boggling 25% per year over the last 10 years. The fund has consistently beaten its benchmark by over 8%. If you had invested Rs.1 lakh 10 years back your investment would have become Rs. 9.3 lakh by now. The investment objective of the firm is to invest in a well diversified portfolio on value stocks. This is among a handful of funds which has stuck to its investment objective even through the turbulent times of 2007 -2009 and has been rewarded handsomely for it.
Should you invest?
Considering the current economic environment and the run up in the primary market the fund may find it difficult to find stocks to invest in as per its investment objective. However this is one fund which sticks to its investment objective even in the most challenging of circumstances. Considering the scheme's past performance, investment philosophy and discipline the fund has shown, it is definitely recommended to invest in ICICI prudential value discovery fund.
Optima Money managers is a financial planning & Wealth Management Company. Author is a Certified Financial Planner and can be reached at www.optimamoney.com.
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