Large Cap Mutual Funds invest in market leaders that have the ability to generate stable returns even amidst stock market chaos. So, as a mutual fund investor, Large Cap Mutual Funds are a must in your portfolio.

During an economic slowdown, Large Cap Funds tend to offer stability and witness lower downside risk compared to Mid Cap Funds and Small Cap Funds. Thus, when you invest in Large Cap Mutual Funds, you benefit from the steady growth of capital over the long run without exposing your portfolio to high risk.

Click here to find out PersonalFN’s list of the best Large Cap Mutual Funds to invest in 2023.

ICICI Pru Bluechip Fund is one of the most popular Large Cap Fund that holds a track record of rewarding investors reasonably well in the long run by identifying fundamentally sound stocks in the large-cap space.

Graph 1: Growth of Rs 10,000 if invested in ICICI Pru Bluechip Fund 5 years ago

Graph 1

Past performance is not an indicator of future returns
Data as on February 28, 2023
(Source: ACE MF) 

ICICI Prudential Bluechip Fund is one of the largest schemes in the Large Cap Fund category having an AUM of Rs 34,640 crore as of January 31, 2023. The fund focuses on investing in the top 100 companies listed on the NSE in which the fund manager has high conviction. Having a track record of over 14 years to its credit, ICICI Prudential Bluechip Fund has generated returns at 13.8% compounded annualised since inception, as against 10.5% CAGR generated by its benchmark Nifty 100 – TRI over the same time period. The fund invests in a basket of large and well-established stocks chosen without sector bias. ICICI Prudential Bluechip Fund has displayed its ability to limit the downside risk for its investors during uncertain and highly volatile market conditions, while it has also rewarded with above-average returns during market rallies. While ICICI Prudential Bluechip Fund trailed the category average during the market crash of 2020, it found a place among the top performers in the category during the ensuing bull phase. Over the past five years, the fund has appreciated at 11.8% CAGR, which is higher than the 10.8% CAGR generated by its benchmark Nifty 100 – TRI. An investment of Rs 10,000 in ICICI Prudential Bluechip Fund five years back would have now appreciated to Rs 17,429, compared to a valuation of Rs 16,699 in its benchmark.

Table: ICICI Pru Bluechip Fund’s performance vis-á-vis category peers

Scheme Name Corpus (Cr.) 1 Year 2 Year 3 Year 5 Year 7 Year Std Dev Sharpe
Nippon India Large Cap Fund 12,536 12.48 15.23 18.79 11.48 16.27 24.63 0.17
ICICI Pru Bluechip Fund 34,640 6.27 12.64 18.55 11.75 16.06 22.00 0.18
HDFC Top 100 Fund 22,428 10.53 12.59 18.53 10.83 16.02 23.73 0.17
SBI BlueChip Fund 34,309 7.05 10.21 17.78 11.20 14.61 22.66 0.17
IDBI India Top 100 Equity Fund 603 3.62 12.54 17.68 12.05 14.35 21.58 0.17
Kotak Bluechip Fund 5,265 5.84 11.06 17.50 12.26 15.23 22.20 0.17
Edelweiss Large Cap Fund 391 7.14 11.27 16.74 12.27 15.45 21.76 0.16
Aditya Birla SL Frontline Equity Fund 21,524 3.80 10.56 16.58 10.16 14.19 22.57 0.16
Canara Rob Bluechip Equity Fund 8,642 3.01 9.72 16.53 13.96 16.85 20.19 0.17
Mirae Asset Large Cap Fund 33,446 3.70 9.65 16.09 11.51 16.63 22.30 0.15
NIFTY 100 – TRI 1.56 9.15 16.03 10.79 14.74 22.86 0.15

Returns are point to point and in %, calculated using the Direct Plan-Growth option. Those depicted over 1-Yr are compounded annualised.
Data as on February 28, 2023
(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 put up a respectable performance across most market phases. After witnessing muted growth between 2018 and 2020, the fund showed visible improvement in performance in the last couple of years. In the last 2-year and 3-year period, ICICI Prudential Bluechip Fund has outpaced the benchmark by around 2.5-3.5 percentage points in CAGR. Over the longer time frames too, the fund has maintained a decent lead over the benchmark and the category average. The fund now stands among top quartile performers in the Large Cap Fund category across time frames and has also outpaced the benchmark by a noticeable margin.

In terms of risk-reward, ICICI Prudential Bluechip Fund has generated decent risk-adjusted returns for its investors. Its Standard Deviation has been nearly in line with the category average though slightly lower than the benchmark, while its Sharpe Ratio of 0.18 is much ahead of the benchmark and the category average.

Investment strategy of ICICI Pru Bluechip Fund

ICICI Prudential Bluechip Fund is a large-cap fund that is mandated to invest predominantly in large-cap stocks and hold a minimum of 80% of its investment in equity & equity-related instruments of large-cap companies. The fund follows a bottom-up approach of stock picking whereby it shortlists companies for their merits. The fund needs to invest in stocks from the universe of top 100 stocks (by market capitalisation), as per the list published by AMFI.

ICICI Prudential Bluechip Fund follows a process-based investment strategy to identify quality large-cap stocks forming a part of the top 100 companies by market capitalisation. While the fund is expected to majorly have a growth-oriented approach, it has shown some flair towards value as well. The fund invests in a diversified portfolio of stocks without any sector bias. While picking stocks, the fund managers look for scalability of the company they are considering to buy and give high weightage to the management track record and scope of improving profitability. The fund typically follows a buy-and-hold strategy, looking for a long-term holding period. It had a low turnover ratio of around 20-30% in the last one year.

Graph 2: Top portfolio holdings in ICICI Pru Bluechip Fund

Graph 2Graph 2

Holding in (%) as of January 31, 2023
(Source: ACE MF) 

As of January 31, 2023, ICICI Prudential Bluechip Fund held a large portfolio of 70 stocks. The top 10 stocks form 55.5% of the fund’s holdings. The fund held its major exposure in index heavyweights such as ICICI Bank, Reliance Industries, HDFC Bank, Infosys, and L&T. Among its other top holdings, the fund held names like Axis Bank, Bharti Airtel, Maruti Suzuki India, Ultratech Cement, and SBI Life Insurance Company, having allocations in the range of 2% to 6%. Many of these names have been prominent holdings in the fund’s portfolio for well over 2 to 3 years now. It also currently holds a nominal allocation of 0.3% in overseas equities and 0.7% in Rights.

In the last two years, ICICI Prudential Bluechip Fund benefitted the most from its holdings in ICICI Bank, Bharti Airtel, L&T, TVS Motor Company, and Infosys, that turned out to be the top contributors to its gains. Axis Bank, NTPC, ITC, Reliance Industries, Hindalco Industries, HDFC Bank, Vedanta, and Sun Pharma were among the other top contributors to its gains.

In terms of sector, ICICI Prudential Bluechip Fund ‘s portfolio is skewed towards Banking and Finance, that collectively form about 30.9% of its portfolio. Infotech, Petroleum, Engineering, and Auto are the other top sectoral holding together accounting for another 35.3% of its assets. The remaining portion of the fund’s portfolio is diversified across a range of sectors like Pharma, Consumption, Cement, and so on. While the fund’s portfolio has a higher allocation to cyclicals, it also has reasonable diversification to defensive and sensitive sectors.

Suitability

ICICI Prudential Bluechip Fund has done well to curb the downside during volatile market corrections, whereas it has actively participated the market rallies to deliver decent returns for its investors. The fund has shown consistency in performance and has managed to beat the benchmark as well as the category average returns across bull as well as bear market phases seen in the past.

ICICI Prudential Bluechip Fund has a proven track record of identifying fundamentally sound stocks in the large-cap space. The fund aims to reduce volatility by investing in a well-diversified portfolio of stocks across sectors that enjoy a competitive edge and have a sustainable market share. Moreover, it does not react strongly to market events and maintains a long-term focus. Portfolio changes are gradual, keeping in mind the long-term growth outlook.

ICICI Prudential Bluechip Fund is suitable for investors looking for a stable Large Cap Fund that holds well-diversified portfolio stocks and sectors with a long-term view.

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


Leave a Reply

Your email address will not be published. Required fields are marked *