A competent manager and a sound investment approach are this fund’s most appealing aspects.
Mrinal Singh has proved himself in the portfolio manager role, which he assumed in Aug 2009. Singh, who started with ICICI Prudential AMC in June 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 the fund in a downturn (2011) and upturns (2012 and 2013) marred by volatility, enabling us to build confidence in both the manager and his approach.
Singh combines absolute and relative valuation parameters to uncover stocks he believes are trading at a significant discount to their fair value. Beyond valuation, he looks for differentiating factors (technological prowess, cost advantage) that can give the company a sustainable edge over peers. Simply put, he seeks a combination of attractive valuations and robust fundamentals. During his stint as an analyst, Singh was the investment team’s small/mid-cap specialist. He plays to his strengths here, running a small/mid-cap portfolio and his willingness to be patient with smaller-cap fare gels well with the valuation-conscious approach.
That being said, the approach can hold back the fund in rising markets. For instance, when valuations are stretched, the fund may have a hard time competing. Because the strategy focuses on uncovering attractively priced stocks, being ensnared in value traps is a risk. A growing asset base can pose challenges in the form of having to spread out trades and liquidity management. It is evident that over shorter time frames investors need to be able to ride out bouts of volatility and underperformance. However, for risk-tolerant investors willing to be patient and stay invested over a market cycle, the fund can deliver pleasing results.
So far, Singh has been able to effectively execute the investment strategy. Hence, his presence at the helm aids our confidence. The fund offers enough to earn our Bronze rating.