Bets on banks, auto give ICICI Pru Value Discovery Fund an edge

Himadri Buch MoneycontrolICICI Prudential Value Discovery Fund--launched by ICICI Prudential Mutual Fund in 2004--figures among top performing diversified funds over three-year, five-year and ten-year timeframes.The scheme is ranked no.1 in the diversified equity category by CRISIL for the quarter ended June 2016. This scheme follows a value-investing style and is in fact one of the oldest value-styled funds in the industry. The objective of the scheme is to provide long-term capital growth by investing primarily in a well-diversified portfolio of companies accumulated at a discount to their fair value. The fund adopts a Warren Buffett style of value investing: it doesn't hunt for deep-value stocks but for stocks with growth potential trading at a discount.Fund manager Mrinal Singh, who is also the Deputy CIO, Equity at the fund house, attributes the outperformance to the fund's discipline in strictly adhering to value style of investment.  Its strong bottom-up strategy along with a flexicap approach has also aided the fund's performance, Singh added.This fund is best suited for investors seeking long-term wealth creation. This would work well for investors with long-term goals like child’s education, child’s marriage, planning for retirement or home purchase.Detailed below is a snapshot of features, portfolio analysis, and performance of ICICI Prudential Value Discovery Fund:PERFORMANCE

    On November 2, net asset value of the scheme was Rs 124.0 per unit.Portfolio Analysis In October, the scheme's assets under management stood at Rs 14,979 crore, up 3.6 percent over September. Going by the factsheet, as of October-end, the scheme had invested 92 percent of its corpus in equities and remaining was in debt. Last month, around 76 percent of the portfolio was invested in large cap companies, and mid-caps had 22 percent weightage in the portfolio while the rest were deployed in smallcaps. The portfolio consisted of 48 stocks. The top pick of the scheme was HDFC Bank with 7.94 percent of AUM deployed in the scrip followed by Wipro and Larsen & Toubro with 6.88 percent and 6.57 percent, weightage in the portfolio, respectively. ICICI Bank and Infosys with 5.96 percent and 5.75 percent share in the portfolio, respectively, were other two among the top five stocks. The fund’s portfolio was largely skewed towards the financial sector with the fund having almost 22 percent of its assets deployed in the financial services sector last month. This bet could boost its performance if the economy shows signs of picking up as financial services is the best play in economic recovery. The second quarter GDP at 7.1 percent was below market expectations and so far indications are that the full year GDP growth will be flat. Banking was followed by technology with 16 percent and pharmaceuticals with 8.6 percent. Investors have become a bit cautious on the pharmaceutical sector because the sector as a whole is now looking expensive. The fund manager made the least allocation to consumer durables (0.71 percent), FMCG (0.92 percent), and metals (1.26 percent). The fund also had exposure to energy, automobile, construction, and engineering, among others. In terms of sectors, the scheme augmented its holding in automobiles, auto ancillaries, and consumer durables. Auto is an indicator of economic recovery as well as pay hikes for government employees. The scheme increased its holding in Wipro, Larsen & Toubro, Infosys, last month. The scheme decreased its holding in Sun Pharmaceutical Industries, among the top 10 holdings. In October, the exposure remained unchanged in HDFC Bank, ICICI Bank, NTPC, Maruti Suzuki India, Bajaj Finserv and Container Corp.SCHEME FEATURES Options: Growth dividend;Minimum investment: Rs 1,000;Entry load: NilExit load: 1 percent for exit within one-year from the date of allotment and no load if exited after one-yearPerformance benchmark: S&P BSE 500 Index;Fund manager: Mrinal Singh (Since Feb-2011)