Large-cap funds aim to provide stability and capital appreciation to investors. Stable businesses, greater market share, quality of management, the sustainability prospects and a proven track record are some of the traits that large caps possess. Thus, they tend to withstand better in times of turbulent market conditions.

ICICI Prudential Bluechip Fund is one such fund that aims for long term growth by investing in stocks of large sized companies. Launched in May 2008, the fund has a track record of over 10 years.

The fund is co-managed by Mr Rajat Chandak (since July 2017) and Mr Anish Tawakley (since September 2018), while Ms Priyanka Khandelwal is the dedicated fund manager for managing overseas investments of the scheme.

In this brief analysis, we take a close look at the features and performance of ICICI Prudential Bluechip Fund.

Investment objective of ICICI Prudential Bluechip Fund

The investment objective of the scheme is to generate long-term capital appreciation and income distribution to investors from a portfolio that is predominantly invested in equity and equity related securities of large cap companies.

Table 1: Fund Facts ICICI Prudential Bluechip Fund

Category Large Cap Fund Style Growth
Type Open ended Market Cap Bias Large cap
Launch Date 23-May-2008 SI Return (CAGR) 13.19%
Corpus (Cr) Rs 21,125 Min. /Add. Inv. Rs 100 / Rs 100
Expense Ratio (Dir/Reg) 1.21% / 1.83% Exit Load 1%

Portfolio Data as on July 31, 2019.
SI Return as on August 21, 2019.
(Source: ACE MF)

Graph 1: Growth Of Rs 10,000, If Invested In ICICI Prudential Bluechip Fund 5 Years Ago

ICICI Prudential Bluechip Fund

Data as on August 21, 2019
(Source: ACE MF)

Had you invested Rs 10,000 in ICICI Pru Bluechip Fund five years back on August 20, 2014, it would have grown to Rs 16,147 as on August 20, 2019. This translates into compounded annualised growth rate of 10.06%. In comparison a simultaneous investment of Rs 10,000 in its benchmark NIFTY 100 – TRI would now be worth Rs 15,175 (a CAGR of 8.7%). As can be seen in the chart above, the fund has managed to keep a significant lead over the benchmark in the last five years.

Graph 2: ICICI Prudential Bluechip Fund Year-on-Year Performance

ICICI Prudential Bluechip Fund

*YTD as on August 21, 2019
(Source: ACE MF)

The year-on-year performance of ICICI Pru Bluechip Fund vis-a-vis its benchmark NIFTY 100 – TRI shows that the scheme outperformed the index in 7 out of last 10 calendar years. Majority of outperformance was generated from CY 2009-2011 and CY 2014. However, in CY 2012 and CY 2018, the fund lagged the benchmark. Its performance was in line with that of the benchmark in CY 2017. In the current year 2019, the fund has trailed the benchmark and generated negative returns even as the index generated positive returns.

Table 2: ICICI Prudential Bluechip Fund Performance vis-a-vis category peers

Scheme Name Corpus (Cr.) 1-year (%) 2-year (%) 3-year (%) 5-year (%) Std Dev Sharpe
Mirae Asset Large Cap Fund 13,492 6.01 13.45 16.34 19.05 12.41 0.12
Axis Bluechip Fund 6,501 10.02 17.26 15.32 15.59 12.46 0.16
Reliance Large Cap Fund 12,260 6.24 13.22 15.09 17.54 14.12 0.08
HDFC Top 100 Fund 17,095 7.11 11.44 15.00 14.82 13.82 0.08
ICICI Pru Bluechip Fund 21,125 4.27 11.68 14.20 15.18 11.57 0.07
Indiabulls Blue Chip Fund 222 4.07 11.44 14.01 14.30 13.32 0.08
Canara Rob Bluechip Equity Fund 212 6.82 12.39 13.73 13.97 12.37 0.08
HSBC Large Cap Equity Fund 655 1.93 9.58 13.01 12.78 12.61 0.06
IDFC Large Cap Fund 411 1.97 10.46 12.93 11.72 12.35 0.04
Edelweiss Large Cap Fund 158 5.09 12.34 12.88 14.49 13.00 0.06
Invesco India Largecap Fund 190 4.12 11.17 12.64 15.56 11.92 0.05
Aditya Birla SL Frontline Equity Fund 20,584 1.51 8.75 12.16 15.04 12.28 0.01
Essel Large Cap Equity Fund 104 0.67 8.28 11.88 13.60 13.20 0.03
Tata Large Cap Fund 771 3.42 9.63 11.68 13.48 12.75 0.04
UTI Mastershare 5,843 4.20 10.48 11.68 13.89 11.77 0.03
Kotak Bluechip Fund 1,303 3.10 9.47 11.42 14.74 12.60 0.02
PGIM India Large Cap Fund 314 3.02 9.56 11.41 14.38 11.84 0.04
SBI BlueChip Fund 21,585 0.93 8.47 11.32 16.31 12.66 0.01
Sahara Super 20 Fund 0.3 1.76 8.66 11.12 10.58 12.17 0.01
L&T India Large Cap Fund 475 2.81 9.05 10.76 13.40 12.59 0.03
NIFTY 100 – TRI 5.79 12.30 13.75 13.40 12.31 0.07

Returns are on a rolling basis and in %, calculated using Direct Plan – Growth option. Those depicted over 1-Yr are compounded annualised.
(Data as on August 21, 2019)
(Source: ACE MF)

*Please note, this table only represents the best performing funds based solely on past returns and is NOT a recommendation. Mutual Fund investments are subject to market risks. Read all scheme related documents carefully. Past performance is not an indicator for future returns. The percentage returns shown are only for indicative purposes.

ICICI Prudential Bluechip Fund has performed remarkably well and outperformed the average category returns across rolling periods. It managed to outpace the benchmark across 3-year and 5-year rolling periods. However, it trailed the benchmark in 1-year and 2-year rolling periods.

The fund has found its place among top 5 performers on a 3-year rolling return basis. Mirae Asset Large Cap FundAxis Bluechip FundReliance Large Cap Fund and HDFC Top 100 Fund ended as top category performers over the period.

In terms of risk-return parameters, the fund undertook low risk as compared to peers and the benchmark. However, its risk-adjusted returns were better than most of its peers.

Investment Strategy of ICICI Prudential Bluechip Fund

ICICI Prudential Bluechip Fund is an open-ended scheme that aims to maximise long-term returns by predominantly investing in equity and equity related instruments of large-cap companies.

The scheme aims to invest in a basket of large and well established stocks, chosen without any sector bias. It looks for companies generally enjoying a competitive edge, having a sustainable market share and expected to grow over the next 5 years and more.

The scheme adopts a disciplined yet flexible long-term approach to investing with a focus of generating long term capital appreciation. It follows bottom up approach to identify bargain stocks with promising potential for long term growth and adopts a `buy & hold’ strategy.

Although the scheme has the flexibility to invest a part of its corpus in overseas markets and derivatives, it rarely takes exposure to such instruments.

Graph 3: ICICI Prudential Bluechip Fund Portfolio Allocation And Market Capitalisation Trend

ICICI Prudential Bluechip Fund

Holdings (in %) as on July 31, 2019
(Source: ACE MF)

ICICI Prudential Bluechip Fund is mandated to invest minimum 80% of its asset in equity and equity related instruments of large-cap companies while the balance can be in equity and equity related instruments of companies other than large caps as well as debt and money market instruments.

In the last 12 months, the fund held an average allocation of 85% in large-caps and carried a marginal allocation of 2-4% in mid-caps. It has completely avoided investing in the high risk small-caps. The fund maintained 10-15% of its holdings in cash, debt and derivative instruments.

Graph4: ICICI Prudential Bluechip Fund Top Portfolio Holdings

Holdings (in %) as on July 31, 2019
(Source: ACE MF)

As on July 31, 2019, ICICI Prudential Bluechip Fund held 52 stocks in its portfolio, diversified across various sectors. The top 10 stocks constitute 48.6% holdings of the portfolio with HDFC Bank having the highest allocation of 9.4%. ICICI Bank and Infosys follow closely behind with an allocation of 6.8% and 6.4%, respectively. The other stocks in the top 10 holdings carry an allocation in the range of 3-4%.

In terms of sector wise holdings, Banking sector has the highest share of 22.3%, with another 9.8% in Finance. Infotech and Consumption have the next highest allocation with holdings of around 9-10% each. The other prominent sectors in the portfolio are Petroleum Products, Power, Telecom and Auto.

Top Contributors

Among the stocks in the portfolio, ICICI Bank contributed the most to the portfolio gains in the last one year with a portfolio return of 1.4%. SBI, Infosys, HDFC and Interglobe Aviation were the other top contributors to the portfolio gains. Most of these stocks are a part of the fund’s top 10 holdings.

The stocks that eroded portfolio gains the most were Motherson Sumi Systems, Maruti Suzuki India, TVS Motors and Vedanta.

Suitability of ICICI Prudential Bluechip Fund

Large-cap companies are better poised to handle market volatility as compared to mid and small caps and can appreciate wealth over long-term. ICICI Prudential Bluechip Fund seeks to provide growth and stability to investor’s through a portfolio of large cap stocks diversified across sectors.

The fund focuses on stocks which are market leaders in their respective industries. With this, it may turn out to be a suitable investment option in turbulent economic conditions.

ICICI Prudential Bluechip Fund has performed well in the past and has generated decent risk-adjusted returns for its investors. It is one of the popular funds in the category and is suitable for moderately high risk takers with investment horizon of 5 years or more. However, one should weigh all the options and make a prudent choice while investing in mutual funds.

Note: This write up is for information purpose and does not constitute any kind of investment advice or a recommendation to Buy / Hold / Sell a fund. Returns mentioned herein are in no way a guarantee or promise of future returns. As an investor, you need to pick the right fund to meet your financial goals. If you are not sure about your risk appetite, do consult your investment consultant/advisor. Mutual Fund Investments are subject to market risks, read all scheme related documents carefully.

This article first appeared on PersonalFN here.

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