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Prudential ICICI Growth Fund

Dhirendra Kumar

Prudential ICICI Growth is a diversified equity fund. In its close to three-year tenure, the dividend plan of the fund has paid three dividends aggregating to 130 per cent. With a bottom up strategy, the fund sought to invest in companies with established business model and strong cash flows. Further, the fund benchmarked its portfolio to the S&P CNX Nifty, seeking to hold stock and sector specific limits in line with the Index.

With this strategy, the fund built a quality-oriented diversified portfolio, with a good blend of growth and cyclical stocks. Technology, healthcare and consumer goods were consistently the top holdings of the fund. With the market upturn in 1999, this well-knit strategy yielded the fund 188 per cent, leaving Nifty far behind at 70 per cent.

FUND BASICS   Objective    Size (Cr)    NAV: 21/05/2001    Exit Price    Entry Price    Total Return   Growth   332.99   18.91   18.91   19.25   24.35%

Beginning 2000, the fund turned overweight on software and telecom stocks, which accounted for 51 per cent at the peak of the rally. Even while the fund struck to its stock specific limits, quality picks such as Infosys and Dr Reddy's featured as top holdings along with momentum plays such as Global Tele and DSQ Software at the peak. The fund reposed faith in technology through the tumultuous 2000, with the sector accounting for an average 46 per cent per cent. While this was far less than the stakes held by its aggressive peers, clearly the fund had breached allegiance to its benchmark. Not surprising then, the fund ended 2000 at a negative 33.40 per cent trailing behind its benchmark, which lost just 13.75 per cent.

Benchmark Comparisons (%) (18/05/2001)      1M    3M    6M    1Yr    3Yr   Fund   8.05   -15.16   -11.59   -11.84   -   Nifty Tot. Ret.   6.36   -14.93   -4.91   -8.87   2.76   Sensex   6.29   -15.59   -6.42   -12.82   -2.21   Obj. Avg.   5.45   -19.21   -14.15   -18.81   6.29

Changing tack in 2001, the fund has pruned its allocation to technology, and has broad-based the portfolio to include healthcare, finance and diversified industries among others. "We have maintained near neutral weight on technology sector and we would review our current stand at an appropriate time," says chief investment officer Dileep Madgavkar. Importantly, the fund has brought in sharp focus on quality and better reflects its guiding index today.

Prudential ICICI Growth has delivered a reasonable 24.35 per cent to beat its benchmark index on the back of a diversified yet tech-heavy portfolio. Though the fund has recently initiated a recast in favour of a diversified portfolio with large-cap orientation, it remains to be seen if this is sustained. For that, is critical for it to emerge as a steady performer.

Top Holdings (30/04/2001)      Value (Cr)    % of Assets   Larsen & Toubro   18.81   5.65   BHEL   18.15   5.45   Cipla   18.11   5.44   State Bank Of India   16.68   5.01   MTNL   15.58   4.68   Gujarat Ambuja Cements   14.58   4.38   BPCL   13.19   3.96   Dr. Reddy's Lab.   12.92   3.88   HDFC   12.69   3.81   I T C   12.69   3.81

Source: Value Research

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