114239  |  INF109K01GU4  |  4 star  |  Bronze

NAV

$ 17.98

1-Day Total Return

0.01
%
INR | NAV as of 8/22/2017 9:30:00 AM | 1-Day Return as of 22 Aug 2017

TTM Yield

0.00%

Load

Multiple

Total Assets

77.6 bil

Expenses

1.80%

Fee Level

--

Turnover

565%

Status

Open

Min. Inv.

10,000

30-Day SEC Yield

--

Category

Corporate Credit

Credit Quality/Interest Rate Sensitivity

Mid/Limited
Author
Morningstar's Take | 28/02/2017
by Himanshu Srivastava

Portfolio manager Rahul Bhuskute took over ICICI Prudential Regular Savings in October 2013 after it had undergone a series of changes at the helm. From its inception in December 2010 until August 2012, the fund was led by Chaitanya Pande. Avnish Jain took over in September 2012 after Pande exited the company. Jain managed this fund for one year and was replaced by Bhuskute.

The fund's investment strategy is rooted in credit calls, with little room for duration plays. Bhuskute therefore goes down the credit ladder in his quest for high-yielding securities. The portfolio is dominated by sub-AAA rated securities, which as of January 2017 accounted for nearly 84% of the portfolio. With a focus on credit calls, company-specific research is integral to the investment approach. Bhuskute is mindful of the risks involved in such an approach and follows a rigourous selection process. He invests only if a security passes muster on all his selection parameters. In our opinion, the process jells well with Bhuskute's prowess in credit calls.

The fund endured a rough patch when holding Jindal Steel & Power went through a series of downgrades before eventually defaulting on its interest payment last year. In September 2015, the security (rated Crisil A+) accounted for 3.80% of the portfolio. The manager has consistently reduced exposure to the holding, and as of January 2017, it accounted for 1.69% of the portfolio. Bhuskute maintains that it's more prudent to hold the security until maturity rather than offload it at a loss. Having said that, this hasn't altered our conviction in the fund and its manager. It's worth noting that such a risk is inherent to the strategy plied here, which entails going down the credit ladder.

We draw confidence from Bhuskute and his investment approach. Notwithstanding temporary blips, which go along with credit-oriented strategies, we believe the manager and his process have the wherewithal to outperform category peers over the long term. Hence, we are retaining its Morningstar Analyst Rating of Bronze.

Morningstar Analyst Rating™
Analyst Rating
Portfolio Role

With a focus on credit calls, sub-AAA rated paper dominates the portfolio.

People

Rahul Bhuskute has the credentials to run a strategy rooted in credit calls.

Parent

ICICI Prudential AMC’s stewardship is in line with the industry norm.

Process

A research-based approach that focuses on qualitative and quantitative aspects.

Performance

The fund has yet to deliver on its potential.

Price

The fund's expense ratio is marginally higher than the norm.

Important Disclosures

Unless stated otherwise, this report was prepared by the person(s) noted in their capacity as Manager Research Analysts (i.e., fund analysts) employed by Morningstar, Inc., or one of its affiliates. It has not been made available to the issuer prior to publication.

Analyst Ratings are subjective in nature and should not be used as the sole basis for investment decisions. Analyst Ratings are based on Manager Research Analysts’ expectations about future events and therefore involve unknown risks and uncertainties that may cause such expectations not to occur or to differ significantly from what was expected. Analyst Ratings are not guarantees nor should they be viewed as an assessment of a fund’s or the fund’s underlying securities’ creditworthiness.

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