102528  |  INF109K01AN2  |  2 star  |  Silver

NAV

$ 101.95

1-Day Total Return

0.94
%
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

14.5 bil

Expenses

2.54%

Fee Level

--

Turnover

1,714%

Status

Open

Min. Inv.

5,000

30-Day SEC Yield

--

Category

Small/Mid-Cap

Investment Style

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

The challenges in managing a mid-cap fund are abundant. While unpredictability in the equity markets is accentuated in this segment, factors such as constrained liquidity, limited coverage, and poor disclosures make mid-cap investing a tricky proposition. Hence, the need for a skilled manager and a solid investment process cannot be overstated. ICICI Prudential Midcap makes the grade on both counts.

Mrinal Singh is a competent portfolio manager who has been in the job since May 2011. He has had extensive experience as an analyst in the small/mid-cap space. Unsurprisingly, intensive research forms the core of his investment approach. He fluidly combines top-down and bottom-up approaches to identify companies to invest in. Although the investment strategy here is intended to be growth at a reasonable price, Singh, given his expertise in value investing, tends to scout for stocks that are attractively valued. Therefore, to complement his value bent, Mittul Kalawadia, who typically adopts a growth-oriented investment approach while investing, was appointed as the comanager here on April 2016. As per the fund house, both the managers share equal responsibilities on this fund now.

This has also led to some tweaks in the fund’s investment process, though the broader strategy remains unchanged. For instance, an element of benchmark alignment has been introduced by reducing the extent of the portfolio’s deviation from its benchmark. Also, while selecting stocks, growth aspect is now given more prominence than before. Although ancillary, these changes would give teeth to the strategy.

The fund’s performance has been below average in peer-relative terms over the past few years, that is, from 2015 till 2017 so far. This is largely because Singh has positioned the portfolio for an uptick in the economic cycle, which is yet to happen. While we will evaluate how the comanagement shapes up in the fund going ahead, we continue to draw conviction from Singh’s presence at the helm of the affairs here. We believe his research-driven investment approach and executional capabilities would keep the fund in good stead. Hence, we reaffirm the fund’s Morningstar Analyst Rating of Silver.

Morningstar Analyst Rating™
Analyst Rating
Portfolio Role

Portfolio is positioned to benefit from the first signs of economic recovery.

People

Mrinal Singh and Mittul Kalawadia complement each other with different investment styles.

Parent

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

Process

Managers ply a growth-at-a-reasonable price approach for selecting stocks.

Performance

The fund’s performance in the recent times has been below expectation.

Price

The fund’s expense ratio is higher than the median of the India Small/Mid-Cap 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

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.

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