The presence of manager Mrinal Singh and his robust investment approach continue to work for the fund.
Over time, Mrinal Singh has emerged as a skilled portfolio manager. Singh, who started his stint with ICICI Prudential AMC in Jun 2008 as an equity analyst, took over a technology sector fund in Aug 2009. In Feb 2011 when he took over this fund, it was his first stint running a diversified fund. Since then, we have had the opportunity to evaluate him and his investment approach across market cycles, enabling us to build confidence in him. While Singh specialises in value investing, he is also an expert in the small/mid-cap segment, an area where he gained extensive experience as an analyst. Singh runs this fund with a valuation-conscious approach, investing in stocks that he believes are trading at a significant discount to their fair value. Until mid-2014, Singh invested predominantly in the small/mid-cap segment. However, since then, this aspect of the strategy has undergone a change; the allocation to large caps has increased significantly (from roughly 25% earlier to nearly 54% as of Apr 2015). During our interaction with the fund house, the investment team maintained that the fund has always been positioned as a flexi-cap fund, hence the increased allocation to large caps is consistent with the positioning. However, we believe that the modified approach is a departure from the manner in which the fund was run earlier. In our opinion, this change can be attributed to two factors: a surge in assets from INR 35.3 billion as of Apr 2014 to INR 91.1 billion as of Apr 2015, and also, stretched valuations in the small/mid-cap segment.
Clearly, the fund's enduring market-cap profile will evolve. However, what continues to work for the fund is the presence of Singh and his robust investment approach. We continue to draw confidence from his stock-picking skills and ability to execute the strategy with skill. We believe the fund still has the wherewithal to outperform its benchmark over the long term. Hence, we reiterate our Morningstar Analyst Rating of Bronze.
Morningstar Analyst Rating™
In a departure from the earlier trend, the exposure to large-cap stocks is on the rise.
Mrinal Singh is an experienced research analyst and competent portfolio manager.
ICICI Prudential AMC’s stewardship is in line with the industry norm.
The manager combines absolute and relative valuation parameters to scout for attractively valued stocks.
During this manager's stint, the fund has delivered a competent showing on risk/return parameters.
The fund's expense ratio is lower than the median of the India small/mid-cap Morningstar Category.
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