Icici Prudential Focused Bluechip Equity: Safe returns with large-cap focus

The fund has contained losses during downsides, offering healthy returns

Given the uncertainty over domestic equity markets, holding large caps in the portfolio could help one tide over volatility and cap losses better.

ICICI Prudential Focused Bluechip Equity invests 90-97 per cent of its corpus in large-cap stocks and around 2 per cent in mid-cap stocks to spice up returns. Cash holdings have been reduced to 1.34 per cent in January 2018 from 3.76 per cent in January 2017.

Since its inception in 2008, the fund has managed to beat its benchmark Nifty 50 index as well as category returns.

Given its large-cap exposure, the fund has contained losses better during downsides in 2011, 2013 and 2015, which has translated into good returns over market cycles.

The fund has generated moderate returns over the past year, but its long-term performance has been more noteworthy.

Growth investing approach

ICICI Prudential Focused Bluechip has a large portfolio of 50 stocks.

This helps mitigate the risk, though there are a few concentrated bets with holdings exceeding 6-7 per cent of the corpus. The top 30 stocks constitute 80-85 per cent of the portfolio.

The fund follows a growth-investing approach, implying that some stock picks could be pricey, but this risk is mitigated by a high-quality large-cap focus. Low portfolio churn thanks to a buy-and-hold strategy and a large corpus (about ₹16,700 crore) help keep the expense ratio (2.17 per cent) below the category average and aid returns.

The top three stocks in the portfolio are ICICI Bank, HDFC Bank and Infosys.

A few stocks such as TVS Motor, Biocon and Reliance Industries have been multi-baggers over the past year.

Only seven of the 50 stocks in the portfolio have lost value in the past year.

The top three sectors in the portfolio are banks, computer software, automobiles.

Over the last one year, the fund has pruned exposure in software, personal care and pharma while increasing exposure in automobiles, power generation and oil drilling/allied services.

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