Are you waiting on the sidelines, expecting markets to correct? What if markets accelerate without room for any meaningful corrections in the foreseeable future? In this light, investors can consider investing in a fund such as ICICI Pru Top 100, a large-cap scheme representing the core of the market. Investors with a modest risk appetite with a time horizon of five years can buy units of the scheme.
Over one-, three- and five-year timeframes, the fund has outperformed its benchmark, the Nifty, by a margin of 4-6 percentage points. It has consistently ranked in the top quartile of large-cap funds over the past three years. ICICI Pru Top 100 has outperformed its peers such as Franklin India Bluechip and DSPBR Top 100. It is apt for conservative investors as it contains downsides very well. Systematic investments can be taken to ride out volatility in the markets.
PerformanceDuring the market corrections in 2008-09 and 2011, the fund managed to contain slide in its NAV much better than its benchmark as well as several peers. While it did not have a strong bounceback in 2009, it did manage to participate in every rally quite well, starting 2012.
Banks and Software are the two core sectors of the fund in which it has major allocations. Interestingly, more than one-third of the portfolio’s allocation goes into these two sectors. The rally in bank stocks has aided the fund’s returns, as has its exposure to energy-related stocks. The fund takes a cash position to the tune of a little less than 10 per cent during volatile markets.
ICICI Pru Top 100 has exposure to around 40 stocks, most of which are from the Nifty basket. The fund also has mild exposure to mid- and small-cap stocks such as Great Eastern Shipping and Zuari Agro Chemicals, which have performed well over the past one year and propped up fund returns. It has been able to tap into cyclical themes such as mineral, gas, transport and construction. It still has large bets on defensives such as IT, while pruning exposure to richly valued segments such as pharma and FMCG. The top 10 stocks of the fund constitute 54 per cent of the portfolio. But the exposure is to quality names.
Invest in it for its stability and relatively low risk.