Mutual Fund Review: ICICI PRUDENTIAL INDEX FUND

Investment Strategy:

ICICI Prudential Index Fund tracks the Nifty, and invested between 77% and 98% of the fund corpus in the index stocks in 2010. This fund never held more than 1% of the fund corpus as cash. However, this fund had exposure to Nifty futures in all the months of 2010. The percentage of the fund's corpus invested in Nifty futures was in excess of 14% during the first half of 2010. However, since June 2010, the fund's exposure to Nifty futures is below 10% of its corpus.


Asset Size:

The fund AUM is around Rs. 92 crore as at 31 March 2011.

Performance:

Tracking error is the performance metric for an Index fund. So, we considered the tracking error for this fund from 1 year, 3 year and 5 year perspectives. This fund has tracking errors on the positive side for all the three periods and the tracking errors for 3 and 5 year have been more than 1%. The reason for high positive tracking error is due to fund's investment into Nifty futures.

Over a 1 year period, this fund has given 18.73% returns while its benchmark, the S&P CNX NIFTY has given 17.94% and on a 5 year annualized basis, this fund has given 18.08% while the benchmark has given 16.66%.