Are you looking for a multi-cap fund to diversify your risk? Then ICICI Prudential Multicap Fund, which invests in stocks across market capitalisation and follows a growth strategy, may make the grade.

While the erstwhile ICICI Prudential Top 200 Fund (name changed in September 2015) may not have scorched the charts in the past, it has done well in recent times.

Investors with a moderate risk appetite but with a long-term investment horizon could consider investing in this fund.

Over the last one, three and five years, the fund has beaten its benchmark, BSE 200, by 5-8 percentage points. Its returns are on par with other top performing funds, such as Birla Sun Life Equity Fund and Mirae Asset India Opportunities Fund.

Over the past year, the performance of the fund has perked up relative to its peers, but has lagged a bit over a longer three and five-year periods.

The fund’s consistency in performance has improved in recent times. On a one-year rolling return basis, it has beaten its benchmark 93 per cent of the time in the last five years, while, over a three-year period, it has improved to a healthier 96 per cent.

Portfolio moves

When the 2014 election propelled the markets to higher levels, the fund regained traction by gaining almost 50 per cent while its benchmark rose around 35 per cent.

Its large-cap slant across sectors paid off as stocks such as HDFC Bank, ICICI Bank, Bajaj Finserv (Finance), Larsen and Toubro (Infrastructure) and Maruti Suzuki (Auto) gained between 40 and 89 per cent in 2014.

Its mid and small-cap holdings, especially in autos, gained handsomely. The fund used the strong rally in TVS Motors to trim its holdings, while its exposure to Balkrishna Industries and Wabco India boosted returns as they gained 80 and 119 per cent, respectively. The fund also benefited by buying into stocks such as Britannia (FMCG), Ramco Cements, Federal Bank, City Union Bank and V-Guard Industries as they rallied between 80 and 144 per cent.

As the markets turned choppy in 2015, the fund slackened a bit, but still managed to beat its benchmark. While the S&P BSE 200 lost 1.5 per cent, the fund gained 3 per cent. While its core holdings were in the red — ICICI Bank was down by a fourth, ONGC lost a third and Tech Mahindra fell by a fifth — a few other bets paid off.

Bajaj Finserv, for instance, which gained 50 per cent, managed to prop up returns. Exiting positions in SAIL, DCB Bank, Punjab National Bank and South Indian Bank helped cap losses as well.

As of July beginning, the fund is betting on a mix of economic recovery and defensive themes with the top five holdings in banks (14 per cent), pharmaceuticals (14 per cent), finance (11 per cent), software (9 per cent) and consumer non-durables (8 per cent).

While the fund’s top 10 stocks are spread across six sectors, its portfolio consists of 41 stocks across 19 sectors, mitigating risk.

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