Fund of Fortnight
Ninad RamdasiCategories: DSIJ_Magazine_Web, DSIJMagazine_App, Fund of Fortnight, MF - DSIJ Recommendation, Mutual Fund
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.
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.
Reason for recommendation
The last few weeks have been a witness to volatility in the Indian equity market. One of the reasons for such heightened volatility is of course the general election and the uncertainty surrounding its outcome. In such a situation, investment in the FMCG sector makes better sense as consumer goods are less prone to volatility. Besides, better monsoon forecast augurs well for FMCG companies. Hence, our MF select for this issue is ICICI Prudential FMCG Fund, which invests a majority of its corpus in the FMCG sector.
This mutual fund has demonstrated solid performance across various time periods, although it has slightly underperformed the category average in the short term. However, over longer time horizons of three, five and 10 years, the fund has delivered competitive returns of 19.75 per cent, 15.82 per cent and 14.92 per cent, respectively, outperforming the category average. The fund’s top holdings include companies such as ITC Ltd., Hindustan Unilever Ltd. and Nestle India Ltd., which collectively constitute a significant portion of the portfolio.
These holdings reflect a focus on established consumer goods and FMCG companies known for their resilience and long-term growth potential. Compared to other funds in its category, this fund exhibits higher alpha and lower beta, indicating superior outperformance against the benchmark index and lower sensitivity to market fluctuations, respectively. With an alpha of 5.08, the fund demonstrates higher outperformance as against the benchmark (compared to 3.95 for the category average), while its beta of 0.57 signifies lower sensitivity to market ups and downs (compared to 0.68 for the category average). This mutual fund offers an attractive investment opportunity for investors looking for better risk-adjusted returns over time. Since it is a sectoral fund, not more than 10 per cent of your portfolio should be deployed to this fund.
