Diversified portfolio, consistent outperformance

ICICI PRUDENTIAL BALANCED FUND

Launched in November 1999, ICICI Prudential Balanced Fund is classified under the balanced schemes of CRISIL Mutual Fund Ranking. It has featured in the top 30 percentile (CRISIL Fund Rank 1 or 2) in the three consecutive quarters ended June 2017. The fund's quarterly average assets under management (AUM) tallied at ~11,734 crore in June 2017. The primary investment objective of the scheme is to generate long term capital appreciation and current income from a portfolio that is invested in equity and equity related securities as well as in fixed income securities. The fund is jointly managed by Sankaran Naren, Atul Patel and Manish Banthia.

Performance

The fund has managed to consistently outperform the benchmark (CRISIL Balanced Fund - Aggressive Index) and its category (funds ranked under the balanced category in June 2017 CRISIL Mutual Fund Ranking) in all the periods under analysis. Given the fund's extensive track record, it has experienced various market phases, and has outperformed the benchmark across all phases under analysis and its peers in three phases.

An investment of ~1,000 in the fund on March 30, 2002 (since inception of the benchmark) would have grown to ~13,203 on September 18, 2017 at an annualised rate of 18.14 per cent against the benchmark which would have grown to ~6,397 (12.73 per cent).

A systematic investment plan (SIP) is a mode of investment offered by mutual funds to retail investors through which one can invest a certain amount at a regular interval. ICICI Prudential Balanced Fund has outpaced its benchmark in all the periods with significant margin over the longer periods.

Portfolio analysis

In the past three years, the fund has taken average 72.82 per cent exposure to equity. The top five sectors constituted average 51.88 per cent of the fund's equity portfolio. The highest exposure was to banking (18.87 per cent), followed by software (10.41 per cent), pharmaceuticals (9.11 per cent), power (6.96 per cent) and consumer nondurables (6.75 per cent).

Banks, power and finance were the top contributors to the fund's returns. Performance in the banking space was led by ICICI Bank, HDFC Bank and City Union Bank; while Power Grid, CESC and NPTC were power sector contributors. Within the finance sector, Bajaj Finserv returned handsomely (more than five times) in three years. Some of the other contributors were Britannia Industries (more than tripled), Tata Chemicals, Bharat Electronics and Maruti Suzuki.

The fund maintained a diversified portfolio of around 70 stocks recently compared to 48 stocks held, on average, in the past three years. The fund took exposure to 139 stocks during this period, of which only three were held consistently which indicates active churn by the fund manager. The consistently held stocks were ICICI Bank, Federal Bank and Sanofi India, of which two outperformed the fund's benchmark.

The debt portion of the portfolio, comprising sovereign and corporate debt securities, has seen a shift in allocation from sovereign to corporate debt to benefit from higher yields offered by corporate securities. Exposure to corporate debt and government securities averaged 6.98 per cent and 15.77 per cent, respectively, in the past three years.