Investments can be considered in ICICI Pru Dynamic Fund given the fund’s performance over the three and five-year period. Over the same time-frame, the fund has generated an annualised return of 29 per cent and 37 per cent, respectively, and outpaced the benchmark by a good margin.
The fund has a mandate to shift into cash if it believes the market is overheated. The fund’s performance is significant, considering the strategy of moving to cash, on and off.
Suitability: The fund adopts a flexible approach in the selection of large, mid and small-cap stocks.
In general, flexi cap funds have the advantage of benefiting from rallies across the market cap but this steps up the risk profile compared to diversified large cap.
The strategy to move up to 100 per cent into cash has the potential to limit the downside risk of the fund. But it is still not a practical to move entire assets to debt, but the fund can still shift 15-23 per cent of assets into cash.
Based on the fund’s objective and strategy, it appears suitable for a conservative investor.
Performance: Despite the fund being benchmarked against the Nifty, its portfolio sports more flexi cap. Over the past one year, the fund has generated a negative return of 10.6per cent against the benchmark return of negative 9.9per cent.
The broader index CNX 500 has shed value to the tune of 15.5 per cent. Despite having close to 40 per cent of the assets in mid and small cap, the fund has contained the downside better than the benchmark Nifty.
Over the past 24 months, on a rolling return basis, the fund has outpaced the Nifty by 70 per cent of the times.
In spite of markets getting overheated between December and January, the fund reduced the cash holdings. Moving to cash during this peak could have helped the fund to achieve higher return.
Portfolio Overview: The fund’s May portfolio consists of 42 stocks and 21 sectors. One-fourth of the stocks form part of Nifty basket and the rest were from large, mid and small cap.
The top 10 stocks accounts for 45 per cent of the assets. Over the past six months the fund was selective in reducing the holdings in Reliance Industries, Tata Tea, TCS and Patel Engineering. The fund is managed by Mr Sankaran Naren since September 2006.
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