Mutual Fund Scheme Analysis
Name of Scheme: ICICI Pru Dynamic December 13, 2010
Outperformer in Equity Diversified Multi CAP category.
‘5 Star’ rated by Value Research; ‘CPR 1’ ranked by Crisil.
Suited for Medium risk appetite investors.
Overview: ICICI Pru Dynamic is one of the best equity diversified multicap schemes from ICICI Pru Mutual Fund. Given its ability to withstand the
market turbulence especially in downturns and with unbiased strategy of investing in stocks across sectors and market capitalizations, investors with
medium-risk appetite can consider this scheme to add in to their portfolio.
Scheme: ICICI Pru Dynamic Fund AUM (As On 30-Nov-2010) (in Rs. Cr.): 2,707
Option: Growth & Dividend (Reg & Inst) NAV (As On 10-Dec-2010) (Rs.): 108.70
Open/Closed: Open. Exit Load: 1% for redemption within 365 days.
Category: Equity Diversified – Multi CAP. Minimum Investment (Rs.): 5000.00
Launch Date: October 2002. SIP initial Investment (Rs): 1000.00
Fund Manager: Mr. Sankaran Naren & Mr. Rajat Chandak. SIP additional Investment (Rs): 1000.00
The scheme aims to invest primarily in equities and for defensive consideration in fixed income securities including money market instruments
Objective: with the aim of generating capital appreciation. The actual percentage of investments in will be decided after considering the prevailing market
and economic conditions.
Performance: Although the scheme takes up the strategy of investing in stocks across market capitalization, the fund manager prefers to allocate most
of its assets into large cap stocks. The strategy not only helped the scheme to mitigate the losses during downfall but also to recuperate fast during the
period of recovery than other equity oriented peer schemes. Over a five-year period, the fund registered a compounded annual return of 22.24% (1st
position among 30 schemes in the category), which was higher than that of its category and benchmark. The category and the benchmark registered
growth of 17% and 16% respectively for the same period. The scheme has managed to beat its benchmark Nifty and category by a wide margin over the
three-year time period. It registered a return of 7% (1st position) whereas the benchmark and category clocked negative returns of 0.5% each. As far as
short-term performance is concerned, the fund generated 21.38% of one-year return ended 20th December 2010 whereas its category and benchmark
reported 15% and 14% of returns respectively. During periods of market turmoil in 2008, the performance of the scheme was good compared to peer
schemes and benchmark. Its NAV plunged around 33% whereas the category and benchmark fell 47% and 39% respectively.
Expense 6 1 3 5
Scheme Name SD Sharpe Alpha
Ratio (%) Months Year Years Years
ICICI Pru Dynamic Plan (G) 1.86 12.25 21.38 7.17 22.24 0.68 0.10 0.04
Nifty - 15.33 14.08 -0.58 16.25 - - -
Category Max 2.50 18.59 27.98 7.17 22.28 1.22 0.10 0.06
Category Average 2.14 12.13 15.32 -0.53 17.10 0.95 0.05 0.01
Category Min 1.85 -6.41 -13.50 -24.47 4.02 0.68 -0.06 -0.11
Note: Returns (trailing) up to 1 year are absolute and over 1 year are CAGR. NAV/index values are as on December 10, 2010.
Fund Manager: The scheme is jointly managed by Mr. Sankaran Naren and Mr. Rajat Chandak. Mr. Sankaran Naren is a B.Tech from IIT, Chennai and
holds a MBA in Finance from IIM Kolkata. Prior to joining ICICI Prudential AMC, he has worked with various financial services companies like Refco Sify
Securities India Pvt. Ltd., HDFC Securities Ltd. and Yoha Securities in various positions. Mr. Rajat Chandak is a Commerce graduate and holds a MBA
degree. He is with ICICI Prudential AMC since May 2008. He has earlier worked as equity analyst for 1 year. They are managing other schemes jointly
such as ICICI Pru Discovery (5 Star rated by Value Research), ICICI Pru tax (4 star), ICICI Pru Growth (3 star), ICICI Pru Indo Asia Equity and ICICI Pru
Infrastructure (4 Star).
Latest Corpus Expense 6 1 2 3
Scheme Name SD Sharpe Alpha
(Rs. Cr) Ratio (%) Month Year Year Year
Reliance Equity Opportunities (G) 2792.43 1.88 23.22 54.43 50.18 13.79 0.95 0.09 0.06
UTI-Master Value Fund (G) 679.68 2.24 21.98 52.24 46.60 15.95 1.00 0.08 0.05
ICICI Pru Dynamic Plan (G) 2707.01 1.86 13.26 33.69 33.84 11.50 0.68 0.10 0.04
Canara Robeco Equity Diversified (G) 386.93 2.32 15.28 33.77 40.40 12.43 0.78 0.07 0.03
HDFC Premier Multi-Cap Fund (G) 515.95 2.24 18.53 39.82 40.16 10.31 0.88 0.07 0.04
Note: Returns (rolling) up to 1 year are absolute and over 1 year are CAGR. NAV/index values are as on December 10, 2010.
Risk measures: This scheme has done well in terms of its risk ratios of standard deviation, Sharp and Jensons Alpha. As far as Sharpe measure is
concerned, the scheme has scored 0.10% (1st position) of excess returns over risk free rate (6% p.a 91D T-bill) per unit of risk. This is more than that
the scheme’s category average of 0.05%. The Standard Deviation, measure of volatility at 0.68% for the scheme, is the least among the peers. The
scheme scored 0.04% in terms of Jensons Alpha. Alpha measures the ability to generate the consistent return over benchmark. Hence, those statistical
numbers prove the ability of scheme to stand against risk.
Rating & Ranking: The scheme has been rated as ‘5 star’ by Value research under Equity diversified Large Cap category, which indicates high
performance on a risk adjusted return basis. The performance of the funds are rated and classified by value research in the following ways. Top 10%
funds in each category were classified ‘*****’ funds, the next 22.5% got a ‘****’ star, while the middle 35% got a ‘***’, while the next 22.5% and bottom
10% got ‘**’ and ‘*’ respectively. Crisil has assigned “CRISIL CPR 1” rank under “Equity oriented funds category” which indicating “Very Good
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Performance”. The criteria used in computing the CRISIL Composite Performance Rank are Superior Return Score, based on NAVs over the Quarter
ended September 2010.
Unit Growth of investments Vs. Benchmark (Rs. 10,000 invested since Inception)
ICICI Pru Dynamic Nifty
Portfolio: The scheme has been managed with high quality portfolio. The Fund manager invests primarily in large caps. For last one year, he kept
almost 79% equity assets in those stocks. As far as latest portfolio is concerned, the exposure on large cap stocks was kept about 88% (Large Cap =
market capitalization of Rs. 10,000 crore and above; mid cap between 1,000 crore to 10,000 crore and small cap is below 1,000 crore). The scheme has
managed its portfolio by holding an average of 50 stocks. The portfolio has been shuffled frequently in last six months periods as it added 16 new stocks
and exited from 13 stocks. Turnover ratio for this scheme is 171%. RIL, Infosys and ONGC are the stocks topped in its latest portfolio as 6.11%, 5.14%
and 4.50% to its net assets respectively. The expense ratio of 1.86% for the scheme is lower compared to the category’s of 2.14%. The fund manager
has a leeway to take higher exposures to equity when the valuations are low and reduce exposure to equities when the stock market is high. The fund
managers utilized such opportunities that are clearly seen while looking at the portfolio of the scheme over periods. The equity holding has been reduced
marginally from October 2008 (see the chart below). Derivative exposures were also considerable by hedging the equity portion to gain extra income. As
far as cash position is concerned, it held an average of 5% of its net assets as cash and debt during market correction in the year 2008. As of October
2010, the scheme is having 35.42% as cash and debt to its net assets.
40 Debt & Cash (%) (LHS) Sensex (RHS) 23000
Above diagram displays Debt & cash level of scheme along with Sensex movements over periods.
Conclusion: The scheme’s performance over long run is commendable. Considering its efficiency on taking cash calls depending upon the situation as
well as its large cap orientation, investors with medium risk appetite can consirder this scheme to include in their portfolio and can stay invested for at
least 2 years.
Analyst: Dhuraivel Gunasekaran.
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Disclaimer: Mutual Fund investments are subject to risk. Past performance is no guarantee for future performance. This document has been prepared
by HDFC Securities Limited and is meant for sole use by the recipient and not for circulation. This document is not to be reported or copied or made
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including, but not limited to, Institutional Clients
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