We would like to evaluate the manager’s ability to execute the process over a market cycle to build conviction.
Manager Chintan Haria joined ICICI Prudential AMC as a dealer in 2005. He assumed research responsibilities in Jan 2011 and subsequently started managing equity funds in May 2011. This is a rapid rise and Haria’s first stint at managing money. Prior to Haria, the fund was under the helm of CIO Sankaran Naren (from Oct 2005 to Feb 2011), followed by a brief stint by manager Munzal Shah, who departed the fund house in May 2011.
Pleasingly, and despite the changes, there is consistency in the process. The fund continues to be run with an unconstrained benchmark-agnostic multi-cap strategy. Haria draws upon Naren’s views on the macroeconomic scenario when taking sector bets, which we view positively, given the latter’s expertise in the same. Stocks are selected by using a combination of absolute (DCF models) as well as relative valuation measures (P/E and P/B). Haria’s stock-picking style is flexible, allowing both growth- as well as value-styled picks. However, valuations play an important role as he avoids investing in expensive stocks/sectors even in his growth picks. While the manager tends to have a longer investment horizon for his mid/small-cap picks, the large-cap portion of the portfolio is traded quite aggressively. We believe this aspect of the strategy is somewhat risky and it results in timing risk in the fund.
The investment team has seen relatively high turnover in the past, which remains a cause for concern. We would like to see the stability in the team over a longer time frame. As a portfolio manager, Haria hasn’t done badly thus far on the performance front. The investment approach adopted by him appears to complement the skill set he built as a dealer; also, he continues to draw support from the investment team. That said, it’s still early days here and we would like to see more of Haria's ability to execute the process over a market cycle to build conviction in his abilities. Hence, the fund retains its Neutral rating for now.
Morningstar Analyst Rating™
With its bias for large-cap stocks, the fund can feature as a core holding in an investor’s tax-saving portfolio.
These are still early days for Chintan Haria as an analyst and portfolio manager.
ICICI Prudential’s stewardship is in line with the industry norm.
Haria plies an unconstrained multi-cap strategy with a flair for trading around stocks.
Under Haria’s brief stewardship so far, the fund has delivered an above-average performance.
The fund’s price is lower than that of a median offering from the ELSS category.