{"id":873,"date":"2019-08-10T06:02:07","date_gmt":"2019-08-10T06:02:07","guid":{"rendered":"http:\/\/blog.certifiedfinancialguardian.com\/?p=873"},"modified":"2019-08-10T06:22:22","modified_gmt":"2019-08-10T06:22:22","slug":"icici-prudential-value-discovery-fund-finding-value-through-large-cap-bias","status":"publish","type":"post","link":"https:\/\/blog.certifiedfinancialguardian.com\/index.php\/2019\/08\/10\/icici-prudential-value-discovery-fund-finding-value-through-large-cap-bias\/","title":{"rendered":"ICICI Prudential Value Discovery Fund: Finding Value Through Large-cap Bias"},"content":{"rendered":"\n

Value-investing is all about finding `diamond\nin the rough\u2019. This approach aims to invest in stocks that are trading below\ntheir intrinsic value but have the potential to grow over time due to strong\nbusiness fundamentals. When the stocks in the portfolio realise their true\nworth, investors are rewarded with higher gains.<\/p>\n\n\n\n

ICICI Prudential Value Discovery Fund is\namong the handful of funds that follow value-based approach to investing. The\nfund was launched on August 16, 2004 and has an AUM of Rs 16,185 crore, the\nhighest in the category.<\/p>\n\n\n\n

As per the SEBI mandate, value funds should\nfollow a value investment strategy and invest minimum 65% of total assets in\nequity and equity related instruments.<\/p>\n\n\n\n

The fund is managed by Mr Mrinal Singh who\nis associated with the scheme since February 2011, whereas Ms Priyanka\nKhandelwal looks into the overseas investment of the fund.<\/p>\n\n\n\n

In this brief analysis, we take a close\nlook at the features and performance of ICICI Prudential Value Discovery Fund.<\/p>\n\n\n\n

Investment objective of ICICI\nPrudential Value Discovery Fund<\/strong><\/p>\n\n\n\n

The investment objective of the scheme is\nto generate returns through a combination of dividend income and capital\nappreciation by investing primarily in a well-diversified portfolio of value\nstocks.<\/p>\n\n\n\n

Fund Facts ICICI Prudential Value Discovery <\/strong>Fund<\/strong><\/p>\n\n\n\n

\n Category<\/strong>\n <\/td>Value Funds<\/td>\n Style<\/strong>\n <\/td>Value<\/td><\/tr>
\n Type<\/strong>\n <\/td>\n Open ended\n <\/td>\n Market Cap Bias<\/strong>\n <\/td>\n Large cap\n <\/td><\/tr>
\n Launch Date<\/strong>\n <\/td>16-Aug-2004<\/td>\n SI Return (CAGR)<\/strong>\n <\/td>19.03%<\/td><\/tr>
\n Corpus (Cr)<\/strong>\n <\/td>Rs 16,185<\/td>\n Min. \/Add. Inv.<\/strong>\n <\/td>Rs 1,000 \/ Rs 500<\/td><\/tr>
\n Expense Ratio (Dir\/Reg)<\/strong>\n <\/td>1.25% \/ 1.89%<\/td>\n Exit Load<\/strong>\n <\/td>\n 1%\n <\/td><\/tr><\/tbody><\/table><\/center>\n\n\n\n

Portfolio Data as on June 30,\n2019.
SI Return as on August 07, 2019.
\n (Source: ACE MF)<\/p>\n\n\n\n

Growth Of Rs 10,000, If Invested In <\/strong>ICICI\nPrudential Value Discovery <\/strong>Fund 5 Years Ago<\/strong><\/p>\n\n\n\n

\"\"<\/figure><\/div>\n\n\n\n

Data as on August 07, 2019
\n(Source: ACE MF)<\/p>\n\n\n\n

If you had invested\nRs 10,000 in ICICI Prudential Value Discovery Fund five years back on August\n06, 2014, it would have grown to Rs 15,476 as on August 06, 2019. This\ntranslates into compounded annualised growth rate of 9.13%. In comparison a\nsimultaneous investment of Rs 10,000 in its benchmark \u2013 S&P BSE 500 – TRI\nindex would now be worth Rs 15,356 (a CAGR of 8.96%). As can be seen in the\nchart, the fund was able to outperform the benchmark between the end of 2014\nand the end of 2017. From there onwards the alpha started diminishing and now\nthe fund\u2019s performance is in line with the benchmark.<\/p>\n\n\n\n

ICICI Prudential Value Discovery <\/strong>Fund<\/strong>: Year-on-Year Performance<\/strong><\/p>\n\n\n\n

\"\"<\/figure><\/div>\n\n\n\n

YTD as on August 07, 2019
\n(Source: ACE MF)<\/p>\n\n\n\n

The year-on-year performance comparison of\nICICI Prudential Value Discovery Fund with its benchmark S&P BSE 500 – TRI\nshows that the fund has outperformed the benchmark in the last 7 out of 10\ncalendar years. While the fund outperformed the benchmark with significant\nmargin from CY 2009 to CY 2015, it consistently lagged the benchmark from CY\n2016 onwards. The fund failed to manage downside risk in CY 2018 and has\ntrailed even in the current year 2019.<\/p>\n\n\n\n

ICICI Prudential Value Discovery Fund: Performance vis-\u00e0-vis category peers<\/strong><\/p>\n\n\n\n\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t
Scheme Name<\/strong><\/td>\n\t\t\tCorpus (Cr.)<\/strong><\/td>\n\t\t\t1-year (%)<\/strong><\/td>\n\t\t\t2-year (%)<\/strong><\/td>\n\t\t\t3-year (%)<\/strong><\/td>\n\t\t\t5-year (%)<\/strong><\/td>\n\t\t\tStd Dev<\/strong><\/td>\n\t\t\tSharpe<\/strong><\/td>\n\t\t<\/tr>\n\t\t
Tata Equity P\/E Fund<\/a><\/u><\/td>\n\t\t\t5,175<\/td>\n\t\t\t-2.83<\/td>\n\t\t\t9.84<\/td>\n\t\t\t16.89<\/td>\n\t\t\t20.79<\/td>\n\t\t\t13.87<\/td>\n\t\t\t0.09<\/td>\n\t\t<\/tr>\n\t\t
JM Value Fund<\/a><\/u><\/td>\n\t\t\t126<\/td>\n\t\t\t-3.91<\/td>\n\t\t\t8.38<\/td>\n\t\t\t15.64<\/td>\n\t\t\t19.02<\/td>\n\t\t\t16.10<\/td>\n\t\t\t0.05<\/td>\n\t\t<\/tr>\n\t\t
HDFC Capital Builder Value Fund<\/a><\/u><\/td>\n\t\t\t4,290<\/td>\n\t\t\t1.29<\/td>\n\t\t\t12.06<\/td>\n\t\t\t14.73<\/td>\n\t\t\t17.79<\/td>\n\t\t\t13.69<\/td>\n\t\t\t0.06<\/td>\n\t\t<\/tr>\n\t\t
IDFC Sterling Value Fund<\/a><\/u><\/td>\n\t\t\t3,251<\/td>\n\t\t\t-7.66<\/td>\n\t\t\t10.67<\/td>\n\t\t\t14.70<\/td>\n\t\t\t18.34<\/td>\n\t\t\t17.70<\/td>\n\t\t\t0.04<\/td>\n\t\t<\/tr>\n\t\t
L&T India Value Fund<\/a><\/u><\/td>\n\t\t\t8,260<\/td>\n\t\t\t-4.07<\/td>\n\t\t\t7.63<\/td>\n\t\t\t13.32<\/td>\n\t\t\t21.70<\/td>\n\t\t\t14.87<\/td>\n\t\t\t0.04<\/td>\n\t\t<\/tr>\n\t\t
Reliance Value Fund<\/a><\/u><\/td>\n\t\t\t3,213<\/td>\n\t\t\t-0.54<\/td>\n\t\t\t10.30<\/td>\n\t\t\t12.33<\/td>\n\t\t\t17.19<\/td>\n\t\t\t15.63<\/td>\n\t\t\t0.05<\/td>\n\t\t<\/tr>\n\t\t
Quantum Long Term Equity Value Fund<\/a><\/u><\/td>\n\t\t\t924<\/td>\n\t\t\t3.29<\/td>\n\t\t\t7.33<\/td>\n\t\t\t11.98<\/td>\n\t\t\t13.95<\/td>\n\t\t\t10.10<\/td>\n\t\t\t0.00<\/td>\n\t\t<\/tr>\n\t\t
Templeton India Value Fund<\/a><\/u><\/td>\n\t\t\t541<\/td>\n\t\t\t-6.08<\/td>\n\t\t\t6.31<\/td>\n\t\t\t11.45<\/td>\n\t\t\t14.99<\/td>\n\t\t\t14.91<\/td>\n\t\t\t0.01<\/td>\n\t\t<\/tr>\n\t\t
Aditya Birla SL Pure Value Fund<\/a><\/u><\/td>\n\t\t\t4,433<\/td>\n\t\t\t-15.65<\/td>\n\t\t\t3.55<\/td>\n\t\t\t11.04<\/td>\n\t\t\t20.61<\/td>\n\t\t\t18.94<\/td>\n\t\t\t-0.03<\/td>\n\t\t<\/tr>\n\t\t
UTI Value Opp Fund<\/a><\/u><\/td>\n\t\t\t4,211<\/td>\n\t\t\t2.88<\/td>\n\t\t\t9.39<\/td>\n\t\t\t10.55<\/td>\n\t\t\t12.03<\/td>\n\t\t\t12.41<\/td>\n\t\t\t0.01<\/td>\n\t\t<\/tr>\n\t\t
ICICI Pru Value Discovery Fund<\/a><\/u><\/td>\n\t\t\t16,185<\/td>\n\t\t\t1.75<\/td>\n\t\t\t7.01<\/td>\n\t\t\t9.72<\/td>\n\t\t\t18.38<\/td>\n\t\t\t10.70<\/td>\n\t\t\t-0.04<\/td>\n\t\t<\/tr>\n\t\t
S&P BSE 500 – TRI<\/td>\n\t\t\t<\/td>\n\t\t\t2.96<\/td>\n\t\t\t11.39<\/td>\n\t\t\t13.53<\/td>\n\t\t\t14.43<\/td>\n\t\t\t13.09<\/td>\n\t\t\t0.07<\/td>\n\t\t<\/tr>\n\t<\/tbody>\n<\/table>\n\n\n\n

Returns are on a rolling basis and in %, calculated using Direct Plan \u2013\nGrowth option. Those depicted over 1-Yr are compounded annualised.
\n(Data as on August 07, 2019)
\n(Source: ACE MF)<\/p>\n\n\n\n

*Please note, this table only represents the best\nperforming funds based solely on past returns and is NOT a recommendation.\nMutual Fund investments are subject to market risks. Read all scheme related\ndocuments carefully. Past performance is not an indicator for future returns. The\npercentage returns shown are only for indicative purposes.<\/strong><\/p>\n\n\n\n

ICICI\nPrudential Value Discovery Fund underperformed its benchmark S&P BSE 500 –\nTRI in 1-year, 2-year and 3-year rolling period, while it outperformed the\nindex in the 5-year rolling period. Though the fund lagged most of its peers in\n2-year and 3-year rolling periods that was dominated by rally in overvalued\nmidcaps, the cautious approach followed by the fund helped it beat the average\ncategory returns in 1-year rolling period, where most of its mid-cap biased peers\nare bleeding red.<\/p>\n\n\n\n

The fund\nwas at the bottom of the list when 3-year category rolling returns were\ncompared. The top 3 performers included Tata Equity P\/E Fund, JM Value Fund and\nHDFC Capital Builder Value Fund.<\/p>\n\n\n\n

In terms of\nrisk-reward parameters, the fund undertook much lower risk as compared to peers\nand the benchmark. However, even with low risk the fund could not manage to provide\na reasonable risk-adjusted return.<\/p>\n\n\n\n

Investment Strategy of ICICI\nPrudential Value Discovery Fund<\/strong><\/p>\n\n\n\n

The scheme\naims to provide long-term capital appreciation by investing primarily in a\nwell-diversified portfolio of companies that are selected based on the criteria\nof value investing.<\/p>\n\n\n\n

The scheme proposes to carefully accumulate\na portfolio of stocks, which are available at a discount to its intrinsic value\nthrough a process of `Discovery\u2019. The Discovery process involves identification\nof stocks which have attractive valuations in relation to earnings or book\nvalue or current and\/or future dividends and are available at price, which can\nbe termed as bargain.<\/p>\n\n\n\n

This may constitute stocks, which have\ndepreciated for a short period due to some exceptional circumstance or due to\nmarket correction phase or due to lack of interest in investing in a sector,\nwhich has significantly underperformed the market. Such stocks are considered\nto have intrinsic value because of their business models and show potential for\nsmart growth in the future. <\/p>\n\n\n\n

The fund determines the intrinsic value of\nstocks by analysing the financial statements of the companies and parameters\nsuch as EPS (Earnings per Share), the Book Value per share, understanding the\ncompetition land-scape and business structure of these companies.  <\/p>\n\n\n\n

The fund uses industry specific valuation\nmeasures to evaluate companies in every sector in order to select the most\nattractive companies for the portfolio.<\/p>\n\n\n\n

ICICI Prudential Value Discovery Fund\nPortfolio Allocation And Market Capitalisation Trend<\/strong><\/p>\n\n\n\n

\"\"<\/figure><\/div>\n\n\n\n

Holdings (in %) as on June 30,\n2019
(Source: ACE MF)<\/p>\n\n\n\n

ICICI Prudential Value Discovery Fund focuses\non identifying under-valued stocks across market caps, though it currently has\na large-cap bias with an allocation in the range of 66-70%. With a growing\ncorpus and rising valuations in the mid cap segment in CY 2016-2017, IPVDF was\nquick to shift its focus from overvalued mid-cap stocks to higher market caps,\nwhich impacted its performance during the midcap driven market rally. The funds\nexposure to mid-caps is between 8-12% while that of small-caps is 3-4%. The\nfund has been holding significant exposure of over 5% in Nifty \u2013 Futures, while\nthe remaining portfolio is held in cash and debt instruments.<\/p>\n\n\n\n

ICICI Prudential Value Discovery Fund\nTop Portfolio Holdings<\/strong><\/p>\n\n\n\n

\"\"<\/figure><\/div>\n\n\n\n

Holdings (in %) as on June 30,\n2019
(Source: ACE MF)<\/p>\n\n\n\n

ICICI Prudential Value Discovery Fund has\n41 stocks in its portfolio. The top 10 stocks constitute close to 51% of the\ntotal holdings and are well diversified across sectors. Infosys has the top allocation\nin the portfolio at 7.6%, followed by Sun Pharmaceuticals and State Bank of\nIndia with an allocation of around 7% each. \nNTPC (5.8%), HDFC Bank (4.5%) and Indian Oil Corporation (4%) follow\nclosely behind. The other stocks in the top 10 holdings have allocation of 3-4%\neach.<\/p>\n\n\n\n

In terms of sector-wise holdings, the highest\nexposure is towards Infotech with an allocation of 15.3%. Banking sector is the\nnext highest in the list with an exposure of 12.2%. This is followed by Power\n(8%), Pharmaceuticals (7.7%) and Auto ancillaries (4.7%).<\/p>\n\n\n\n

Top\ncontributors<\/strong><\/p>\n\n\n\n

Among the stocks in the fund\u2019s portfolio,\nWipro contributed the most to gains of the portfolio in the last one year with\na portfolio return of 2%. PI Industries and State Bank of India were the other\ntop contributors to its gains.<\/p>\n\n\n\n

The stocks that eroded the portfolio gains\nthe most were Sun Pharmaceuticals, Mahindra & Mahindra and Exide\nIndustries.<\/p>\n\n\n\n

Suitability of ICICI Prudential Value\nDiscovery Fund<\/strong><\/p>\n\n\n\n

ICICI Prudential Value Discovery Fund aims\nfor capital appreciation by investing in diversified portfolio of stocks\nselected based on the criteria of value investing.<\/p>\n\n\n\n

As the fund looks for stocks that are\ntrading below their intrinsic value, certain bets of the fund may not pay off\nimmediately and may take time before reflecting their true worth. The stocks\nare carefully selected by analysing the financial statement of the business and\nmay therefore carry the potential to provide better risk-reward ratio over\nlong-term. The cautious investment approach and high impetus to value, makes it\nsuitable for individuals with moderately high risk appetite and a time horizon\nof 5-years or more.<\/p>\n\n\n\n

The scheme is well-diversified across\nsectors which along with the focus on value investing can help in reducing the\nvolatility and the risk involved. However, one should weigh all the options and make a prudent choice\nwhile investing in mutual funds.<\/p>\n\n\n\n

Note<\/em><\/strong>: <\/em><\/strong>This write up is for\ninformation purpose and does not constitute any kind of investment advice or a\nrecommendation to Buy \/ Hold \/ Sell a fund. As an investor, you need to pick\nthe right fund to meet your financial goals. If you are not sure about your\nrisk appetite, do consult your investment consultant\/advisor. Mutual Fund\nInvestments are subject to market risks, read all scheme related documents\ncarefully.<\/em><\/p>\n\n\n\n

This article first appeared on PersonalFN here.<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"

Value-investing is all about finding `diamond in the rough\u2019. This approach aims to invest in stocks that are trading below their intrinsic value but have the potential to grow over time due to strong business fundamentals. When the stocks in the portfolio realise their true worth, investors are rewarded with higher gains. ICICI Prudential Value…<\/p>\n","protected":false},"author":5,"featured_media":879,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"cybocfi_hide_featured_image":""},"categories":[3],"tags":[],"_links":{"self":[{"href":"https:\/\/blog.certifiedfinancialguardian.com\/index.php\/wp-json\/wp\/v2\/posts\/873"}],"collection":[{"href":"https:\/\/blog.certifiedfinancialguardian.com\/index.php\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/blog.certifiedfinancialguardian.com\/index.php\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/blog.certifiedfinancialguardian.com\/index.php\/wp-json\/wp\/v2\/users\/5"}],"replies":[{"embeddable":true,"href":"https:\/\/blog.certifiedfinancialguardian.com\/index.php\/wp-json\/wp\/v2\/comments?post=873"}],"version-history":[{"count":3,"href":"https:\/\/blog.certifiedfinancialguardian.com\/index.php\/wp-json\/wp\/v2\/posts\/873\/revisions"}],"predecessor-version":[{"id":882,"href":"https:\/\/blog.certifiedfinancialguardian.com\/index.php\/wp-json\/wp\/v2\/posts\/873\/revisions\/882"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/blog.certifiedfinancialguardian.com\/index.php\/wp-json\/wp\/v2\/media\/879"}],"wp:attachment":[{"href":"https:\/\/blog.certifiedfinancialguardian.com\/index.php\/wp-json\/wp\/v2\/media?parent=873"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/blog.certifiedfinancialguardian.com\/index.php\/wp-json\/wp\/v2\/categories?post=873"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/blog.certifiedfinancialguardian.com\/index.php\/wp-json\/wp\/v2\/tags?post=873"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}