102741  |  INF109K01AH4  |  3 star  |  Bronze

NAV

$ 25.62

1-Day Total Return

0.08
%
INR | NAV as of 23/05/2017 09:30:00 | 1-Day Return as of 23 May 2017

TTM Yield

0.00%

Load

Multiple

Total Assets

61.5 bil

Expenses

1.76%

Fee Level

--

Turnover

591%

Status

Open

Min. Inv.

5,000

30-Day SEC Yield

--

Category

Corporate Credit

Credit Quality/Interest Rate Sensitivity

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

Portfolio manager Rahul Bhuskute took over the mantle of this fund after it had undergone a series of changes on both the manager and strategy fronts. In early 2012, the fund was rebranded as ICICI Prudential Corporate Bond fund (from the erstwhile ICICI Prudential Long Term Floating Rate Plan) to signify a change in strategy. In September 2012, Avnish Jain took the wheel after the erstwhile manager Chaitanya Pande exited the fund company. Jain exited the fund company in Sep 2013 and was subsequently replaced by Bhuskute.

After taking over the fund, Bhuskute aligned its portfolio in line with the fund’s investment proposition investment mandate. Under Jain, the investment approach combined duration calls and credit plays. For duration management, which was Jain’s forte, he invested significantly in government bonds and state development loans despite the fund being billed as a ‘corporate bond fund’. Bhuskute, on the other hand, plies a pure corporate bond strategy and does not invest in government securities. Furthermore, the mainstay of the strategy is taking credit calls rather than making substantial adjustments to the duration. More importantly, the process now gels well with Bhuskute’s prowess in taking credit calls. Further, a research-intensive investment approach enables the manager to help mitigate the risks inherent to such an approach.

Having said this, fund holding Jindal Steel & Power (JSPL) defaulted on its interest payment last year. However, given Bhuskute’s measured exposure to the security, the damage was contained. Having said, this instance hasn’t lowered 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 tag along with the credit-oriented strategies, we believe the manager and his process have the wherewithal to deliver an outperformance versus Morningstar Category peers over the long term. Hence, we recommend retaining a Morningstar Analyst Rating of Bronze for the fund for now.

Morningstar Analyst Rating™
Analyst Rating
Portfolio Role

Rahul focuses on minimising the impact of risks associated with credit strategies on the fund.

People

Rahul 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

Research-based approach that focuses on qualitative and quantitative aspects.

Performance

The fund has performed well under Rahul so far.

Price

The fund’s expense ratio is marginally lower than the category median.

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.

No material interests are held by Morningstar or the Manager Research Analyst in the financial products that are the subject of the research reports or the product issuer. Regarding Morningstar’s conflicts of interest: 1) Manager Research Analysts’ compensation is derived from Morningstar’s overall earnings and consists of salary, bonus and in some cases restricted stock; however, Manager Research Analysts are neither allowed to participate directly or try to influence Morningstar’s investment management group’s business arrangements nor allow employees from the investment management group to participate or influence the analysis or opinion prepared by them. Further information on Morningstar’s Code of Ethics policies is available from http://corporate.morningstar.com/us/asp/subject.aspx?xmlfile=540.xml

Unless otherwise provided in a separate agreement, you may use this report only in the country in which its original distributor is based. The information contained herein is not represented or warranted to be accurate, correct, complete, or timely. This report is for information purposes only, and should not be considered a solicitation to buy or sell any security. Redistribution is prohibited without written permission.

For Recipients in India: Research on securities as defined in clause (h) of section 2 of the Securities Contracts (Regulation) Act, 1956 (“Investment Research”) is prepared by Morningstar Investment Adviser India Private Limited, which is registered with the Securities and Exchange Board of India. Your access to the Investment Research does not establish an advisory relationship with Morningstar Investment Adviser India. You should seek the advice of a financial professional before making an investment decision to ensure, among other things, that the security is suitable based on your particular needs and circumstances.

For Registered users only indicates the feature is available for Registered users only.
Top
Mutual Fund Tools
Feedback