The market may have got back some of its mojo after the Budget, but it is still quite volatile. If a safe bet is what you seek now, ICICI Prudential Focused Bluechip is a fine choice. The fund’s pure large-cap equity focus makes it more stable and less risky, compared with many peers that also invest in smaller stocks.

This is seen in its strong track record in restricting losses effectively in weak markets such as the ones in 2009, 2011 and the recent downturn since January 2015. It may not be a chartbuster in raging bull markets, but ICICI Prudential Focused Bluechip does well in rallies too, thanks to its high-quality picks and value investing strategy. For instance, between August 2013 and January 2015, the fund gained more than 75 per cent. This combination of containing downside well and participating in upside, has translated into robust returns for the fund over market cycles. It has trounced its benchmark Nifty 50 across time-periods, the out-performance being 4-5 percentage points over three and five-year horizons.

The fund’s winning consistency is reflected in its one-year daily rolling returns that have been higher than the benchmark’s more than 95 per cent of the time over the past five years. Compared with large-cap peers, the fund figures in the top quartile over long-time periods, though it slips a notch in shorter tenures.

Investment style

ICICI Prudential Focused Bluechip invests 94-98 per cent of its portfolio in equity, with the balance mostly in cash instruments. It also has some exposure to the derivatives of a few stocks it holds, likely to hedge risk. The fund follows a fairly concentrated strategy in its stock-specific bets. With holdings at about 50 stocks, the fund does take select big bets with exposure going up to 7-9 per cent. But the fact that the fund is large-cap focussed reduces the risk from such bets.

A large corpus size (about ₹9,000 crore currently) and low portfolio turnover (indicating a buy-and-hold strategy) has helped the fund keep its expense ratio at 2.16 per cent, lower than the category average. This, along with good stock selection, has aided returns. Over the past year, most stocks in the fund’s portfolio have taken a knock in line with the market. But over three and five-year periods, several picks such as HPCL, Motherson Sumi and Sun Pharma have doubled or more. Over the past year, the fund’s increased exposure to banks, many of which are feeling asset quality pain, has hurt.

Things should hopefully get better with the asset clean-up at banks going on now.

Reducing stake in auto stocks and increased exposure to refineries, which are in a sweet spot, has helped.

The fund’s sector allocation is a mix of cyclicals and defensives, providing a good hedge.

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