Welcome to PersonalFN’s weekly analysis on diversified equity mutual funds! In this issue, we have analysed ICICI Pru Bluechip Fund, highlighting its performance, peer comparison, investment strategy, fundamentals, portfolio, and suitability.

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

The fund is managed by Mr Anish Tawakley (CIO – Equity) since September 2018 and Mr Vaibhav Dusad since January 2001.

What is the growth of Rs 10,000 invested in ICICI Pru Bluechip Fund five years ago?

Past performance is not an indicator of future returns
Data as of September 27, 2023 

With an AUM of Rs 40,079 as of August 31, 2023, ICICI Prudential Bluechip Fund is currently the largest scheme not just in the Large Cap Fund category but also among diversified equity mutual funds. The fund focuses on investing from the universe of top 100 companies listed on the NSE in which the fund manager has high conviction. Launched in May 2008, ICICI Prudential Bluechip Fund has created a successful track record of generating stable returns over the long run.

Having a track record of over 15 years to its credit, the fund has generated returns at around 14.4% CAGR since inception, as against 11.1% CAGR generated by its benchmark Nifty 100 – TRI over the same time period. The fund invests in a basket of large-sized and well-established stocks, chosen without a sector bias. ICICI Prudential Bluechip Fund focuses on identifying high growth potential stocks available at reasonable valuations. With this strategy, 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 them 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 recovery and bull phase. Over the past five years, the fund has appreciated at a CAGR of 14.9%, which is higher than the returns 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 19,940 compared to a valuation of Rs 18,555 for a simultaneous investment in its benchmark.

[Read: Are Large Cap Mutual Funds Falling Out of Favour?]

How has ICICI Pru Bluechip Fund performed in the past?

Scheme Name	Corpus (Cr.)	1 Year	2 Year	3 Year	5 Year	7 Year	Std Dev	Sharpe
Nippon India Large Cap Fund	15,855	27.05	15.05	31.80	15.91	15.41	15.73	0.42
HDFC Top 100 Fund	25,423	25.11	12.85	28.34	14.15	13.75	15.30	0.37
ICICI Pru Bluechip Fund	40,079	22.70	10.56	26.03	14.87	14.47	13.73	0.38
Mahindra Manulife Large Cap Fund	261	18.46	7.61	24.93	—	—	14.43	0.35
SBI BlueChip Fund	38,881	19.96	7.99	24.80	15.04	12.97	14.70	0.34
Tata Large Cap Fund	1,593	19.39	7.55	24.71	14.35	12.69	14.47	0.34
Franklin India Bluechip Fund	6,769	16.48	4.57	24.30	11.89	11.14	15.78	0.31
Aditya Birla SL Frontline Equity Fund	23,427	18.75	7.24	24.06	13.80	12.44	14.31	0.34
Edelweiss Large Cap Fund	531	22.41	8.66	23.53	15.02	14.25	13.81	0.34
Kotak Bluechip Fund	6,370	19.04	6.73	23.11	15.32	13.74	13.93	0.34
NIFTY 100 – TRI		14.25	5.45	22.04	13.21	13.26	14.76	0.29

The securities quoted are for illustration only and are not recommendatory.
Returns are point to point and in %, calculated using the Direct Plan-Growth option. Those depicted over 1-Yr are compounded annualised.
Data as of September 27, 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 before investing. 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 and has maintained a reasonable lead over the benchmark across most time periods. It has also outpaced the category average on many occasions in the past. After witnessing muted growth between 2018 and 2020, ICICI Prudential Bluechip Fund showed visible improvement in its performance in the last couple of years and has delivered returns at 26% CAGR in the last 3 years. As a result, the fund now stands among the top-quartile performers in the Large Cap Fund category across time frames and has shown reasonable growth compared to the benchmark.

More importantly, ICICI Prudential Bluechip Fund has generated superior risk-adjusted returns for its investors. Its Standard Deviation has been lower than the category average and the benchmark, whereas its Sharpe ratio (0.38) is much higher than the benchmark and is currently the best in the Large Cap Fund category.

[Read: 3 Best Large Cap Mutual Funds to Invest in 2023 – Top Performing Large Cap Mutual Funds in India]

What is the investment strategy of ICICI Pru Bluechip Fund?

ICICI Prudential Bluechip Fund is a Large Cap Fund that is mandated to invest a minimum of 80% of its assets in equity & equity-related instruments of large-cap companies. Accordingly, 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 bottom-up approach of stock picking whereby it shortlists companies with a proven track record, quality management, and good growth potential.

It follows a process-based investment strategy to identify quality large-cap stocks in which the fund manager has high conviction. While the fund majorly has a growth-oriented approach, it has also shown some flair towards the value style of investing. The fund invests in a diversified portfolio of stocks without any sector bias. While picking stocks the fund managers look for the scalability of the company they are considering buying and give high weightage to the management track record and scope of improving profitability. The fund typically follows a buy-and-hold strategy and invests with a long-term view. It had a low turnover ratio of around 25-30% in the last one year.

What are the top portfolio holdings in ICICI Pru Bluechip Fund?

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

As of August 31, 2023, ICICI Prudential Bluechip Fund held a well-diversified portfolio of 66 stocks. The top 10 stocks form 54.2% of the fund’s holdings. The fund held its major exposure in index heavyweights such as ICICI Bank, L&T, Reliance Industries, Infosys, and HDFC Bank. Among its other top holdings, the fund held names like Axis Bank, Ultratech Cement, Bharti Airtel, Maruti Suzuki India, and ITC having allocation in the range of 2% to 5%. 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 0.8% in overseas equities and 1.1% in Rights.

In the last two years, ICICI Prudential Bluechip Fund has benefitted the most from its holdings in L&T, TVS Motor Company, ICICI Bank, Bharti Airtel, and ITC which turned out to be the top contributors to its gains. Axis Bank, NTPC, Maruti Suzuki India, Sun Pharma, ONGC, Tata Motors – DVR Ordinary, and Hindustan Aeronautics were among the other top contributors to its gains.

In terms of sector, ICICI Prudential Bluechip Fund ‘s portfolio is skewed towards the Banking and Finance sector which collectively forms 26.8% of its portfolio. Infotech, Engineering, Auto, and petroleum are the other top sectoral holding together accounting for another 35.7% of its assets. The remaining portion of the fund’s portfolio is diversified across a range of sectors like Cement, Consumption, Pharma, Telecom, and so on. While the fund’s portfolio has a higher allocation to cyclicals it also has reasonable diversification to defensive and sensitive sectors.

Is ICICI Pru Bluechip Fund suitable for my investment goals and risk tolerance?

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. The fund can make gradual changes in the portfolio keeping in mind the long-term growth outlook.

ICICI Prudential Bluechip Fund has a track record of generating above-average returns when compared to its peers and is reasonable in comparison to its benchmark. Notably, ICICI Prudential Bluechip Fund, just like many of its large-cap peers, struggled to match the performance of the benchmark for multiple years in the recent past. However, the fund has shown improvement in performance in the last couple of years, and it has rewarded investors with noteworthy risk-adjusted returns. Notably, its performance may at times be in contrast to its peers that hold significant exposure to mid-caps.

ICICI Prudential Bluechip Fund is suitable for long-term investors who are looking for decent returns along with the stability of large caps with an investment horizon of at least 5 years.

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