It is hard to make a case for ICICI Prudential Infrastructure.

From Sept 2005 to Jan 2011, portfolio manager Sankaran Naren ran ICICI Prudential Infrastructure. In Feb 2011, he relinquished portfolio management responsibilities. Subsequently, manager Prashant Kothari replaced him. In Feb 2012, the fund company announced that Kothari had resigned and that the fund would be helmed by Yogesh Bhatt. We find the frequent change of guard at this fund’s helm rather disconcerting. Moreover, we think Kothari’s exit is a big loss—he was one of the longest-serving members at ICICI Prudential and a skilled manager.

Chiefly, we note that manager Bhatt has experience in tracking sectors such as consumer staples and retail as part of his research responsibilities, issues that the fund cannot invest in. Since Feb 2012, Bhatt has started tracking cement and capital goods sectors as part of his secondary sector responsibilities, but it takes time to build expertise. He has been an advisor for an India-focused offshore consumption fund, but that is of little relevance here. We are inclined to believe that Bhatt’s skill set is not well suited for this fund. The brevity of his experience in research (3 years) and fund management (2.5 years) doesn’t help, either. Another area of concern is workload—we note that Bhatt has been appointed as the portfolio manager for six funds, including this one. The magnitude of research and portfolio management responsibilities he shoulders can constrain his overall potential. In addition, at a parent level, there have been a number of exits from the investment team over the last 12 months, which is a bit disconcerting.

For this fund, Bhatt maintains that he will run the fund in a fashion similar to that of erstwhile manager Kothari. Like Kothari, he will follow a buy-and-hold approach. Similarly, Bhatt has a quality bias when picking stocks. However, he is not averse to investing a small portion of the portfolio in stocks that fail on some of his qualitative criteria, provided they are attractively valued. Also, he claims he will not take cash calls (limited to 10% of assets) and that he will limit investments in derivatives.

The fund was already on a gradual decline when erstwhile manager Kothari took the helm. Our previous Neutral rating was mainly on account of his presence. However, with Kothari now gone, and given the aforementioned concerns, our confidence in the fund is severely dented. Hence, we downgrade the fund to a Negative rating.