ICICI Prudential Flexicap Fund: A Steady Outperformer For The Long Term
In recent weeks, the market has been hitting new highs, with the bull run seemingly intact despite concerns over elevated valuations. The mid- and small-cap segments have experienced a significant rally over the past year, yet, the large-cap space still offers some level of comfort. With the broader markets’ momentum continuing, investors might find value in exploring a flexi-cap fund that leans heavily towards large-caps.
One such option is the ICICI Prudential Flexicap Fund, which, having recently completed three years, presents a compelling case for those with a long-term investment horizon. The fund has shown commendable performance in the relatively short time it has been around. For investors looking to align their investments with specific financial goals, adopting a systematic investment plan (SIP) approach with this fund is advisable.
Healthy Outperformance
The ICICI Prudential Flexicap Fund’s track record over the past three years situates it within the top quartile of its category, demonstrating impressive performance. With returns of 45.1%, 31.2%, and 24.6% over the past one-, two-, and three-year periods respectively, the fund ranks among the leading schemes in its class, outpacing the BSE 500 TRI by 3-7 percentage points.
Considering one-year rolling returns from July 2021 to July 2024, ICICI Prudential Flexicap has delivered an average return of 21.6%. More notably, across this three-year span, on a one-year rolling basis, the fund has consistently outperformed its benchmark BSE 500 TRI nearly all the time (99.7%). It achieved returns exceeding 15% more than 58% of the time and surpassed 12% returns nearly 71% of the time.
The SIP returns (XIRR) over the past three years also stand out at 31.8%, compared to its benchmark’s returns of 27.3%, emphasizing the fund’s robust performance. The ICICI Prudential Flexicap Fund showcases an upside capture ratio of approximately 93.6, suggesting it captures most of the benchmark’s gains during rallies. Its downside capture ratio of 61.9 illustrates the fund’s resilience, as it tends to fall much less than the BSE 500 TRI during market corrections.
Large-Cap Bias
The fund predominantly invests in large-cap stocks, which typically make up 65-77% of its portfolio, offering stability. Recently, the portfolio has cautiously increased its allocation towards small-cap stocks, which now represent 19.4%. This well-balanced approach to market capitalization has allowed the fund to benefit from the broader market rally over recent years.
ICICI Prudential Flexicap employs both value and growth investing strategies across its sector and stock selections. Banks and automobiles, consistently among the top sectors within the fund’s holdings, have provided solid performance, with the latter not becoming excessively expensive. Meanwhile, the fund has scaled back its investments in software companies amid an uncertain growth outlook, despite these stocks seeing a modest rally.
Recent strategic moves include increased investments in leading retail firms like Avenue Supermarts and Trent. Mid- and small-cap investments are made in sectors where large-cap options are limited, focusing on industries such as auto components, industrial products, and wealth management.
The fund’s investment strategy is characterized by concentrated exposure to its top stocks, with the top 10 holdings comprising over 50% of the portfolio. Beyond the top 10, the fund’s holdings become more diversified.
For those aiming for steady, long-term outperformance and possessing an above-average risk appetite, the ICICI Prudential Flexicap Fund is a suitable choice. Opting for an SIP can help investors navigate volatility and optimize cost averaging, enhancing the potential for rewarding investment outcomes.
