A year ago, we recommended ICICI Pru Dynamic, given that a volatile market required an active valuation and asset allocation strategy (You can click here to see the call).
Had you invested then, you would not have regretted; the fund delivered 13.4% returns in the past 1 year, as against the 2.5% return by benchmark CNX Nifty and the 2.2% category average return. What’s more, an investment using SIP would have generated over 20% returns in the past year.
This superlative performance, even while keeping risk at bay, is not a short-term phenomenon. The fund’s rise to fame has become more evident in the last 5 years, especially after the 2008 downturn.
While the uncertainty on the economic, political and corporate fronts may be less daunting now than it was a year ago, holding a fund that will dynamically allocate its assets between equity and debt may provide some hedge to your portfolio, as it contains downsides better. Investors with a long-term perspective can add ICICI Pru Dynamic along with other equity funds as part of their core portfolio.
The Fund
ICICI Pru Dynamic seeks to invest in equities taking in to account the price to book value of the market. The fund will up its exposure to equities when valuations fall and lower its exposure when market valuations become steep. That means that the fund can take cash calls in prolonged bull markets when valuations rise too sharply.
For instance, by end 2007, when the market went into euphoria, the fund steadily reduced exposure to equities. Similarly, in end 2012, when markets had delivered well, its equity holding was reduced to as low as 80%. The ensuing months – beginning of 2013, saw equities underperform.
The takeaway for you from the fund’s investment style is that there could be periods during bull phases when the fund underperforms as a result of a relatively higher cash holding compared with peers. But such calls would be part of an overall market strategy and going by past instances, the fund’s earlier calls have proved right on hindsight. Hence, do brace yourself for less impressive returns in a market rally. Use the fund as a good hedge in your equity portfolio.
Performance
ICICI Pru Dynamic comfortably beat its benchmark over a 10-year time frame, with a compounded annual return of 20% as against 12.4% return of the CNX Nifty and a category average of 15.8% annually. While the fund’s performance might seem exceptional, its rolling returns bring out periods of underperformance, especially in a rallying market.
On a rolling 1-year rolling return basis (in the last 3 years), the fund beat its benchmark 83% of the times. The short spurts of underperformance happened during sharp rallies. Still, the record is good enough for a diversified equity fund. On a risk-adjusted basis too (measured by sharpe ratio), while the fund scores well in the diversified fund category, a large-cap fund from the same stable, ICICI Pru Focused Bluechip Equity scores better. While this is not to undermine ICICI Pru Dynamic’s exceptionally good performance, you will do well not to be carried away by the present high returns.
Portfolio
ICICI Pru Dynamic’s portfolio turnover suggests that the fund churns its portfolio quite often. While the fund held about 81% in equities in end –December, it increased its stake in January, given the correction over the month. The fund also takes exposure to derivatives when required. As of January, it held Nifty index futures.
While over two-thirds of the fund’s exposures are in large-cap stocks, it has some contrarian picks as well in this market cap segment, perhaps picked as a result of beaten down valuations. NMDC, Power Grid Corporation and Cairn India are such examples. The fund is managed by Sankaran Naren and Mittul Kalawadia.
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dear vidya
good to hear that your recommendation was a valid one as proved by performance.wish to hear from the investors who had invested in it
Hi Vidya,
Thanks for this informative post. You have very well summarized the takeaway from the fund. Also, could you also please share how this fund stand in comparison with its peers e.g. UTI Opportunities or say BSL FrontLine Equity. I know all these are very good funds, but if we understand the fine line of differences between the same category of funds, then it is lot easier for us in decision making 🙂
Hi Rahaman,
This fund is not strictly comparable with the ones you mentioned. That is they belong to a diff. genre within equity funds. Both of the funds you mentioned are large-cap biased and will stick to equity most of the times. But ICICI Pru Dynamic can significantly reduce exposure to equities. As ICICI Pru Dynamic is more for a stability to portfolio and can actually underperform during prolonged rallies (as the fund may take cash calls on steep valuations), this can be an addn. to a portfolio and not a substitute for the other funds. thanks,
I have invested a lump sum amt in Icici dynamic Growth (Direct) I do a additional purchase of 1100 to 1200/- per month. And same with UTI Opportunites fund also. Am doing good.
Hai madam,
i want to invest for 3-5 years in ICICI PRU balanced adv(g) fund or ICICI pru dynamic plan (g), which you mentioned. what about your view on above two funds? which one i need to go for?
Hello Sir, Both have diff. mandates. The balanced fund will have about 25-30% in debt always, while it changes dynamically with the other fund. Kindly use the ‘Ask Advisor’ feature if you are a FundsIndia account holder to help us assess which fund will suit you, based on your requirement. thanks, Vidya
i wish to invest in icici pru dyn sip rs 2000 for 12 mths from april. on other site ifind 2 icici prru dyn as “inst and regular.”
which i should invest “div” or “growth”.
besides i wish to inv in hdfc balanced 4000 sip for 12 mnths. i am senior citizen and
besides canara robeco eq tax saver 4000 sip from april.
in all this can u adv whether i go for div or growth and am i correct in this decision? u can advise.
Hello Sir, since you have a fully activated account, i would request you to use the ‘Advisor appointment’ feature available in the help tab in your account. This is a free service and will help us keep a proper record of your query and ensure it is attended to. For now, I shall ask one of our advisors to get in touch with you regarding your query. thanks, Vidya
hai iam pramod i want to invest @1000 per inmonthSIP kindly give me advice to how to and witch fund to invest.
Hi Promod, pl. register and activate your free account with FundsIndia for us to provide you help/advice with investing. thanks,
Hi vidya
Nice article, I have one query ICICI Pru dynamic fund and UTI opportunites fund both are in your recommended list. As per you which one will you find worth in terms of performance, expense ratio, returns, stability etc for a long term SIP
Hi Satish, they are both not comparable. UTI Opportunities is a diversified equity fund with a tilt for large-caps. ICICI Pru Dynamic will take cash calls based on market valuations. The latter may hold the risk of underperforming in short bursts of rally. Vidya
I have invested a lump sum amt in Icici dynamic Growth (Direct) I do a additional purchase of 1100 to 1200/- per month. And same with UTI Opportunites fund also. Am doing good.
dear vidya
good to hear that your recommendation was a valid one as proved by performance.wish to hear from the investors who had invested in it
Hi Vidya,
Thanks for this informative post. You have very well summarized the takeaway from the fund. Also, could you also please share how this fund stand in comparison with its peers e.g. UTI Opportunities or say BSL FrontLine Equity. I know all these are very good funds, but if we understand the fine line of differences between the same category of funds, then it is lot easier for us in decision making 🙂
Hi Rahaman,
This fund is not strictly comparable with the ones you mentioned. That is they belong to a diff. genre within equity funds. Both of the funds you mentioned are large-cap biased and will stick to equity most of the times. But ICICI Pru Dynamic can significantly reduce exposure to equities. As ICICI Pru Dynamic is more for a stability to portfolio and can actually underperform during prolonged rallies (as the fund may take cash calls on steep valuations), this can be an addn. to a portfolio and not a substitute for the other funds. thanks,
Hi vidya
Nice article, I have one query ICICI Pru dynamic fund and UTI opportunites fund both are in your recommended list. As per you which one will you find worth in terms of performance, expense ratio, returns, stability etc for a long term SIP
Hi Satish, they are both not comparable. UTI Opportunities is a diversified equity fund with a tilt for large-caps. ICICI Pru Dynamic will take cash calls based on market valuations. The latter may hold the risk of underperforming in short bursts of rally. Vidya
Hai madam,
i want to invest for 3-5 years in ICICI PRU balanced adv(g) fund or ICICI pru dynamic plan (g), which you mentioned. what about your view on above two funds? which one i need to go for?
Hello Sir, Both have diff. mandates. The balanced fund will have about 25-30% in debt always, while it changes dynamically with the other fund. Kindly use the ‘Ask Advisor’ feature if you are a FundsIndia account holder to help us assess which fund will suit you, based on your requirement. thanks, Vidya
i wish to invest in icici pru dyn sip rs 2000 for 12 mths from april. on other site ifind 2 icici prru dyn as “inst and regular.”
which i should invest “div” or “growth”.
besides i wish to inv in hdfc balanced 4000 sip for 12 mnths. i am senior citizen and
besides canara robeco eq tax saver 4000 sip from april.
in all this can u adv whether i go for div or growth and am i correct in this decision? u can advise.
Hello Sir, since you have a fully activated account, i would request you to use the ‘Advisor appointment’ feature available in the help tab in your account. This is a free service and will help us keep a proper record of your query and ensure it is attended to. For now, I shall ask one of our advisors to get in touch with you regarding your query. thanks, Vidya
hai iam pramod i want to invest @1000 per inmonthSIP kindly give me advice to how to and witch fund to invest.
Hi Promod, pl. register and activate your free account with FundsIndia for us to provide you help/advice with investing. thanks,