ICICI Prudential Top 100 Fund
- Fund Manager: Sankaran Naren
- Process: A disciplined investment process following a top-down approach to evaluate stocks.
- Performance: Excellent track record across the risk and return parameters.
- Expense Ratio: 2.43%
- Minimum Investment: Rs 5,000
Our confidence in the fund's prospects remains strong.
This is manager Sankaran Naren's second stint on the fund after running it from September 2006 to February 2011. He relinquished fund management duties for about a year and returned to the helm in February 2012. We think highly of Naren's investment skills, and it helps that he plies an investment strategy he has made his own through the years.
An interesting facet of Naren's investing style is he will stick to his convictions even if the situation is contrary to his investment decision. The strategy is centred on a top-down approach and sector bets. The portfolio has a large-cap bias with a value orientation and focuses on stocks that have significant long-term growth potential. The approach of regular profit booking and rebalancing of the portfolio has helped the fund to buy equities at low valuations and sell at high valuations. We believe in Naren's ability in reading the macroeconomic environment. He studies factors such as fiscal policy, current account deficits, inflation, economic growth rate, and government policies to form his top-down views. His philosophy is to ensure the fund performs better than peers when markets fall, even if the strategy hurts performance in rising markets, thereby ensuring robust performance over a market cycle. We believe such funds usually tend to do well across market cycles when one holds for the long term.
Naren makes use of relative valuation parameters to invest in large-cap stocks he believes are attractively priced relative to their growth prospects. It isn't uncommon for him to trade aggressively. While Naren runs a pure-play large-cap strategy, the typical peer can invest roughly up to 30% in small/mid-caps. As a result, the fund runs the risk of losing out on the impetus smaller-cap stocks can provide. Naren's tactics are not without risk, but we believe the fund can hold investors in good stead over a market cycle.
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