Fund of Fortnight

This is our mutual fund recommendation. Every fortnight, we recommend one open-ended equity diversified fund that has the best potential of returns for the next one year considering its constituents remain the same. [EasyDNNnews:PaidContentStart]

Reason for recommendation 

In the last one month there has been a subtle shift in the performance of equity indices. Large-Cap indices have outperformed the Small-Cap and Mid-Cap indices. Also, we may see a rate cut that makes long-term debt attractive. Hence, our choice of mutual fund for this issue is an aggressive Hybrid Fund that invests both in equity and debt, with large-caps carrying higher weight. ICICI Prudential Equity and Debt Fund has allocated 68 per cent of its corpus in equity out of which 60 per cent is in large-cap stocks. Mid-caps and small-caps constitute around 4 per cent and 5 per cent, respectively. Almost 19 per cent is invested in debt. 

Over the past 10 years, the fund has consistently outperformed the category average across most of the timeframes. The fund’s three-month return is 9.54 per cent, exceeding the category average of 7.87 per cent. Looking at the fund’s one-year performance, it has generated a remarkable 39.7 per cent return, outpacing the category average of 35.78 per cent. The trend continues over the longer term too. The fund has diversified its investments across a range of key sectors, with a significant allocation to the financial sector, which comprises 17.2 per cent of the portfolio. 

This allocation capitalises on the stability and growth potential inherent due to a fall in interest rates. The energy sector follows closely with 13.59 per cent weighting. When comparing the fund to its peers, it clearly stands out due to its higher alpha of 10.48 compared to the category average of 6.73. The fund’s beta of 0.75, lower than the category average of 1.32, indicates that it is less sensitive to market fluctuations. This fund’s consistent outperformance across different time horizons, combined with its balanced sectoral allocation and strategic individual holdings, makes it fit for a moderately aggressive investor.

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