ICICI Pru Bluechip Fund: Investing in High Conviction Large-cap stocks

Aug 04, 2022

Listen to ICICI Pru Bluechip Fund: Investing in High Conviction Large-cap stocks

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Large Cap Funds are those that invest a minimum of 80% of their assets in equity and equity-related instruments of large-sized companies. Large-sized companies enjoy stable growth, competitive advantage, brand equity, and are backed by quality management team.

Since Large Cap Funds invest in companies that have a strong balance sheet and enjoy customer loyalty, they are able to manage market downturns better. Thus, if you are looking to build wealth over the long term without too much volatility, Large Cap Funds are an ideal choice.

ICICI Pru Bluechip Fund is one of the most popular Large Cap Fund that holds a track record of rewarding investors reasonably well in the long run by identifying fundamentally sound stocks in the large-cap space.

Graph 1: Growth of Rs 10,000 if invested in ICICI Pru Bluechip Fund 5 years ago

ICICI Prudential Bluechip Fund is one of the largest schemes in the Large Cap Fund category having an AUM of Rs 29,981 crore as of June 30, 2022. The fund focuses on investing in the top 100 companies listed on the NSE in which the fund manager has high conviction. Since its launch in May 2008, ICICI Prudential Bluechip Fund has generated returns at a CAGR of 14.2%, compared to a CAGR of 11.1% delivered by its benchmark Nifty 100 - TRI. The fund invests in a basket of large and well-established stocks, chosen without sector bias. ICICI Prudential Bluechip Fund has displayed its ability to limit the downside risk for its investors during uncertain and highly volatile market conditions, while it has also rewarded with above-average returns during market rallies. While ICICI Prudential Bluechip Fund trailed the category average during the market crash of 2020, it found place among the top performers in the category during the ensuing bull phase. Over the past five years, the fund has appreciated at 12.6% CAGR, which is largely in line with the benchmark returns. An investment of Rs 10,000 in ICICI Prudential Bluechip Fund five years back would have now appreciated to Rs 18,091.

Graph 1
Past performance is not an indicator of future returns
Data as on August 03, 2022
(Source: ACE MF)
 

Table: ICICI Pru Bluechip Fund's performance vis-á-vis category peers

Scheme Name Corpus (Cr.) 1 Year 2 Year 3 Year 5 Year 7 Year Std Dev Sharpe
Canara Rob Bluechip Equity Fund 6,824 4.40 25.67 20.71 14.76 13.43 20.11 0.20
IDBI India Top 100 Equity Fund 544 8.13 29.63 20.53 11.86 11.29 21.20 0.19
Kotak Bluechip Fund 4,217 5.85 27.62 19.83 12.95 12.15 22.13 0.18
UTI Mastershare 9,238 5.73 27.92 18.82 12.79 11.45 21.50 0.17
Mahindra Manulife Large Cap Pragati Yojana 159 6.49 28.73 18.73 -- -- 21.52 0.17
ICICI Pru Bluechip Fund 29,981 9.70 29.02 18.35 12.58 12.56 21.96 0.16
IDFC Large Cap Fund 963 7.02 24.34 18.20 11.61 11.77 21.26 0.16
SBI BlueChip Fund 29,983 6.56 28.70 18.15 11.67 11.98 22.68 0.16
Nippon India Large Cap Fund 10,585 14.44 34.93 18.04 12.36 12.17 25.08 0.14
Invesco India Largecap Fund 616 5.73 25.91 18.04 12.51 12.18 21.79 0.16
NIFTY 100 - TRI 8.97 27.89 18.03 12.60 12.09 22.53 0.15
Returns are point to point and in %, calculated using the Direct Plan-Growth option. Those depicted over 1-Yr are compounded annualised.
Data as on August 03, 2022
(Source: ACE MF)
*Please note, this table only represents the best performing funds based solely on past returns and is NOT a recommendation. Mutual Fund investments are subject to market risks. Read all scheme-related documents carefully. Past performance is not an indicator for future returns. The percentage returns shown are only for indicative purposes.
 

ICICI Prudential Bluechip Fund has put up a respectable performance across most market phases. The fund's returns have been consistent with the benchmark across most time periods, whereas, it has outpaced the category average on many occasions in the past. After witnessing muted growth between 2018 and 2020, the fund has shown visible improvement in performance in the last one year. Moreover, over the long-term horizon of 5 years and 7 years the fund stands among the top quartile performers in the category and has shown reasonable growth when compared to the benchmark.

In terms of risk-reward, ICICI Prudential Bluechip Fund has generated decent risk-adjusted returns for its investors. Its Standard Deviation has been nearly in line with the benchmark and category average, while its Sharpe ratio is ahead of the benchmark and the category average.

ICICI Pru Bluechip Fund: Investing in High Conviction Large-cap stocks
Image source: www.freepik.com - photo created by mindandi
 

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Investment strategy of ICICI Pru Bluechip Fund

ICICI Prudential Bluechip Fund is a large-cap fund that is mandated to invest predominantly in large-cap stocks and hold a minimum of 80% of its investment in equity & equity-related instruments of large-cap companies. The fund follows a bottom-up approach of stock picking whereby it shortlists companies for their merits. The fund needs to invest in stocks from the universe of top 100 stocks (by market capitalisation), as per the list published by AMFI.

ICICI Prudential Bluechip Fund follows a process-based investment strategy to identify quality large-cap stocks forming a part of the top 100 companies by market capitalization. While the fund is expected to majorly have a growth-oriented approach, it has shown some flair towards value as well. The fund invests in a diversified portfolio of stocks without any sector bias. While picking stocks the fund managers look for scalability of the company they are considering to buy and give high weightage to management track record and scope of improving profitability. The fund typically follows a buy-and-hold strategy, looking for a long-term holding period.

Graph 2: Top portfolio holdings in ICICI Pru Bluechip Fund

Graph 2 Graph 2
Holding in (%) as of June 30, 2022
(Source: ACE MF)
 

As of June 30, 2022, ICICI Prudential Bluechip Fund held a large portfolio of 71 stocks. The top 10 stocks form 58.7% of the fund's holdings. The fund held its major exposure in index heavyweights such as ICICI Bank, Infosys, HDFC Bank, and Reliance Industries. Among its other top holdings, the fund held names like L&T, Bharti Airtel, Axis Bank, Maruti Suzuki India, SBI Life Insurance Company, and HCL Technologies having allocation in the range of 2% to 6%. Many of these names have been prominent holdings in the fund's portfolio for well over 2 to 3 years now. It also currently holds a nominal allocation of 0.4% in overseas equities.

In the last one year, the fund has benefitted from its holdings in Bharti Airtel, Reliance Industries, ICICI Bank, TVS Motor Company, and ITC that turned out to be the top contributors to its gains. However, it lost some value in Axis Bank, HDFC Bank, Infosys, Bharat Petroleum Corporation, among others.

In terms of sector, ICICI Prudential Bluechip Fund's portfolio is skewed towards Banking and Finance that collectively form 30.9% of its portfolio. Infotech, Auto, Petroleum, Pharma, and Engineering are the other top sectoral holding together accounting for another 43.5% of its assets. The remaining portion of the fund's portfolio is diversified across range of sectors like Telecom, Consumption, Cement, and so on.

 

Suitability

ICICI Prudential Bluechip Fund has a proven track record of identifying fundamentally sound stocks in the large-cap space. The fund aims to reduce volatility by investing in a well-diversified portfolio of stocks across sectors that enjoy a competitive edge and have a sustainable market share. Moreover, it does not react strongly to market events and maintains a long-term focus. Portfolio changes are gradual keeping in mind the long-term growth outlook.

The fund has a track record of generating above-average returns when compared to its peers and is reasonable in comparison to its benchmark. Notably, ICICI Prudential Bluechip Fund, just like many of its peers struggled to match the performance of its benchmark in the past few years. However, the fund has shown improvement in performance since last year and has rewarded its investors with respectable risk-adjusted returns.

ICICI Prudential Bluechip Fund is suitable for investors looking for a stable Large Cap Fund that holds well-diversified portfolio stocks and sectors with a long-term view of at least 3 to 5 years.

 

Warm Regards,
Divya Grover
Research Analyst

 

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Note: This write up is for information purpose and does not constitute any kind of investment advice or a recommendation to Buy / Hold / Sell a fund. Returns mentioned herein are in no way a guarantee or promise of future returns. As an investor, you need to pick the right fund to meet your financial goals. If you are not sure about your risk appetite, do consult your investment consultant/advisor. Mutual Fund Investments are subject to market risks, read all scheme related documents carefully.

 

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