Fund of Fortnight
Ninad RamdasiCategories: DSIJ_Magazine_Web, DSIJMagazine_App, Fund of Fortnight, MF - DSIJ Recommendation, Mutual Fund
The equity market seems to be trading in a range and there are hardly any triggers to move the needle either way. Even the current earning season till now is at best a mixed bag.
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.
ICICI Prudential Multi-Cap Fund - Direct Plan
Reason for recommendation
The equity market seems to be trading in a range and there are hardly any triggers to move the needle either way. Even the current earning season till now is at best a mixed bag. The US Federal Reserve rate hike decision may be one of the notable triggers going forward. There is also no trend emerging in terms of sector or categories. Hence, investing in a fund that has a mandate to invest across market-cap makes good sense. A multi-cap fund which invests at least half the portfolio in Mid-Caps and small caps is a good choice at the current juncture.
ICICI Prudential Multi-Cap Fund is one such fund from the category. At the end of March 2022, the fund has allocated 29 per cent and 31 per cent to mid-caps and small-caps, respectively, while having Large-Cap allocations to the tune of 40 per cent. This fund has improved its return profile in recent times. In the last one month the fund has generated return of one and a half times its category average. Looking at its annual returns, this fund has never generated negative calendar year returns in the last 10 years. Moreover, looking at its risk metrics, it almost matches the category average with being marginally higher on risk-adjusted returns and marginally lower in risk.
Looking at the portfolio, this fund is well-diversified and has invested in almost 90 stocks with the top 10 stocks contributing only 33 per cent of the total assets. In terms of sector allocation, the fund is overweight on financial, technology and automotive. Except for technology, the other two sectors look undervalued and may lead to the future growth of the NAV of this fund. The fund looks good for investment. However, being skewed towards the broader markets, it is bound to be risky and hence is suitable for investors with aggressive risk profile with investment horizon of more than one year.
