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ICICI Pru Midcap Fund: Watch closely
Fri, Sep 09, 2016
Source : Yash Jashnani, Citrus Interactive

ICICI Prudential Mid Cap Fund is an open ended equity diversified midcap fund. The primary objective of the Scheme is to seek to generate capital appreciation by actively investing in diversified mid cap stocks.  The fund has an AUM of Rs 1,198 crore as on July 2016 which has decreased by Rs 199 crore compared to last year 31st July 2015.

 

Performance

 

The fund has given an average performance as seen in the table given below. It has beaten its benchmark in 6 months, 3 Year, 5 year and Since Inception time period but not in the YTD and 1 year time periods. It has beaten its category average in 6 months, 3 Year and 5 year but not in the YTD and 1 year time period.

 

Scheme Name

YTD

6 Months

1 Year

3 Years

5 Years

Since Inception

ICICI Prudential Mid Cap

5.12

16.56

0.13

39.68

18.18

18.68

 NIFTY FREE FLOAT MID CAP 100

10.27

18.47

7.61

29.08

12.99

16.96

Category Average

8.92

16.09

4.15

26.45

15.12

NA

Rank

144/163

65/163

134/159

13/146

57/138

NA

Figures are in % as on 31st July 2016; Returns above 1 year in Compounded Annual Growth Rate (CAGR)

 

In terms of the calendar year returns the fund has beat the benchmark in 2012, 2013 and 2014 but has not beaten its benchmark in 2011 and 2015. It has generated higher returns than the category average in 2012, 2013 and 2014 but has underperformed in 2011 and 2015 compared to its category average as shown in the table below.

 

Scheme Name

2011

2012

2013

2014

2015

ICICI Prudential Mid Cap

-32.6

40.47

7.5

86.96

5.09

 NIFTY FREE FLOAT MID CAP 100

-31

39.16

-5.1

55.91

6.46

Category Average

-23.92

34.25

5.43

54.21

3.76

Rank

128/134

35/140

49/144

10/147

60/156

All figures in %


Risk: In terms of measures of risk such as standard deviation the fund has taken higher risk compared to the category median and in terms of Beta (measured over the last 3 years), the fund has taken lower risk compared to the category median.

 

 

 

Standard Deviation

Beta

ICICI Prudential Mid Cap

1.03

0.78

Category Median

0.97

0.89

 

 

 

Risk-Adjusted Return: In terms of Treynor and Sharpe ratio (measured over the last 3 years), the fund has proved higher risk-adjusted returns than the category median.

 

 

Treynor

Sharpe

ICICI Prudential Mid Cap

0.19

0.13

Category Median

0.09

0.08

 

 

Portfolio Category:

Sector concentration: The fund’s concentration in the Top 3, Top 5 and Top 10 sectors is lower than the category median.

 

 

Top 3

Top 5

Top 10

ICICI Prudential Mid Cap

25.68

37.41

58.77

Category Median

35.08

46.85

67.15

 

 

Company concentration: The Fund’s Concentration in the Top 3, Top 5 and Top 10 Companies is lower than the category median.

 

 

Top 3

Top 5

Top 10

ICICI Prudential Mid Cap

15.75

23.54

39.64

Category Median

16.98

25.48

41.27

 

 

 

Number of Equity Holdings: The Fund currently holds 41 stocks in its portfolio (31st July 2016), which is lower than the median stock count of the Equity Diversified category, which currently stands at 46. In the last 5 years the equity holding averages to 42.

 

 

Cash Equivalent:        

 

Its cash equivalent for July was 9.44 per cent – which is on the higher side. The average cash allocation for the last five years is 5.56 per cent. Its maximum allocation to cash over the last two years is 10.51 percent in May 2015 and lowest was 1.49 percent in March 2016. In 2016 it had an average cash allocation of 5.39 per cent.

 

Portfolio Characteristics

 

The Top 5 sectors include Bank-Private, Finance-Investment, Engineering-Construction, Industrial Gases & Fuels and Pharmaceuticals & Drugs.

 

In the last 6 months the fund has bought HDFC Bank, IPCA Laboratories Ltd. and Trent Ltd.

Stocks of Bharat Forge Ltd., Bharti Airtel Ltd., Gateway Distriparks Ltd., Larsen & Toubro Ltd., NMDC Ltd., SKF India Ltd., and Tata Power Company Ltd. have been sold in the last 6 months.

 

Process

 

The scheme would invest 65-100% in Equity & Equity Related Instruments of stocks falling in Nifty Free Float Midcap 100 Index. It would also invest 0-35% in Equity & Equity Related Instruments of stocks falling in S&P BSE Small Cap Index and 0-35% would be invested in Debt, Cash & Money Market Instruments.

 

The Scheme proposes to have careful selection of mid-cap companies with proven products or services and above average earnings growth. AMC will prefer companies with strong balance sheets and sufficient cash flow to fund growth internally. The Scheme will look for reasonably valued companies with above average and sustainable earnings growth.

The Fund manager shall combine top-down analysis with a bottom-up approach to stock selection focusing on earnings growth greater than the Fund's stock universe, placement in the top three deciles of the Fund’s growth model, strong management and a catalyst for future growth. Midcap stocks will be selected based on long term growth prospects but currently trading at modest relative valuations given certain financial measurements such as their price-to earnings ratios, dividend income potential and earnings power.

 

 

Fund Managers

 

Mrinal Singh

 

Mr. Mrinal Singh is a Deputy Chief Investment Officer of Equity at ICICI Prudential Asset Management Company Limited and Assistant Vice President and Fund Manager since April 2011. He was previously the Senior Manager from April 2010 till March 2011 and Manager from June 2008 to March 2010.


Mr. Singh manages the ICICI Prudential Technology Fund,  ICICI Prudential Midcap Fund , ICICI Prudential Value Discovery Fund,  ICICI Prudential Advisor Series,  ICICI Prudential Dividend Yield Equity Fund,  ICICI Prudential value Fund – Series 4, ICICI Prudential value Fund – Series 5, ICICI Prudential Select Large Cap Fund, ICICI Prudential India Recovery Fund – Series 1, ICICI Prudential India Recovery Fund – Series 2, ICICI Prudential India Recovery Fund – Series 3 and ICICI Prudential Business Cycle Fund - Series 1.


Mr. Singh has extensive experience across industries like Financial Services, Auto, and IT and his core competency lies in portfolio management and sector analysis. He holds a Master’s degree in Business Administration from S. P. Jain Institute of Management and Research and a B.E. degree in Mechanical Engineering.

 

Mittul Kalawadia

 

Mr. Mittul Kalawadia has been Research Analyst (Senior Manager) at ICICI Prudential Asset Management Company Limited since April 2011, and also serves as its Fund Manager. Mr. Kalawadia served as a Manager at ICICI Prudential Asset Management Company Limited from April 2008 to September 2008 and also served as its Assistant Manager from January 2006 to March 2008.

 

Mr. Singh manages the ICICI Prudential Top 100 Fund, ICICI Prudential Midcap Fund, ICICI Prudential Value Fund - Series 1, ICICI Prudential India Recovery Fund – Series 1, ICICI Prudential India Recovery Fund – Series 2, ICICI Prudential Business Cycle Fund - Series 1 and ICICI Prudential Business Cycle Fund - Series 3.

 

Mr. Kalawadia holds the Chartered Accountant designation. He holds a degree in M.Com.

 

 Our View

 

The fund has had a decent track record. However, the relative performance has lagged behind in the last one year period. The fund has also seen AUM outflows in the last one year. One needs to watch the performance closely and consider investment if there are signs of revival.

 

 

 
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