102594  |  INF109K01AF8  |  4 star  |  Silver

NAV

$ 142.40

1-Day Total Return

0.76
%
INR | NAV as of 15/12/2017 10:30:00 | 1-Day Return as of 15 Dec 2017

TTM Yield

0.00%

Load

Multiple

Total Assets

171.9 bil

Expenses

2.31%

Fee Level

--

Turnover

1,502%

Status

Open

Min. Inv.

1,000

30-Day SEC Yield

--

Category

Flexicap

Investment Style

Large Growth
Author
Morningstar's Take | 30/10/2017
by Himanshu Srivastava

When Mrinal Singh took over the reins of this fund in February 2011, it was his first stint at 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. Over the years he has emerged as a skilled portfolio manager. While Singh specialises in value investing, he is also an expert in the small/mid-cap segment.

Singh runs this fund with a valuation-conscious approach. He relies on a combination of absolute and relative valuation parameters for picking stocks. Until mid-2014, he invested predominantly in the small/mid-cap segment. However, since then, this aspect of the strategy has undergone a change and the allocation to large caps has increased sharply (from 25% to nearly 75% as of August 2017). This could be attributed to two factors: stretched valuations in the small/mid-cap segment and a surge in the fund’s assets from INR 35 billion as of April 2014 to INR 81 billion by December 2014. Nonetheless, the modified approach is a departure from the way the fund was run earlier. The strategy has few inherent risks as well. Given Singh’s extensive focus on valuation, the fund runs a risk of underperforming in momentum-driven and growth-oriented markets. Its recent underperformance vis-à-vis its benchmark index is a testimony of the same. Also, his value picks may result in value traps if stocks bought based on attractive valuations continue to fall further.

Having said that, so far Singh has been able to prudently navigate the fund’s investment process--whether it is shifting from small/mid-caps to large caps or keeping the fund’s valuation focus intact. However, given the fund’s large size, whether he will be able to efficiently shift sizable investments from large caps to mid-caps when the later becomes more lucrative in terms of valuation is an untested aspect. Nevertheless, we continue to draw conviction from Singh’s managerial capabilities and research focus. His preference for safety over outsize returns would result in the fund delivering a stable performance over the long term. Hence, we retain its Morningstar Analyst Rating of Silver.

Morningstar Analyst Rating™
Analyst Rating
Portfolio Role

The exposure to large-cap stocks continues to rise.

People

Mrinal Singh is an experienced research analyst and a competent portfolio manager.

Parent

ICICI Prudential AMC’s stewardship is in line with the industry norm.

Process

Singh combines absolute and relative valuation parameters to scout for attractively valued stocks.

Performance

The fund’s performance in recent times has been subpar but in line with its strategy.

Price

The fund’s expense ratio is lower than the median of the India flexicap category.

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

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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.

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