I have been investing in ICICI Value Discovery fund. Should I change the mutual fund or continue investing in the same fund?Asked
ICICI Prudential Value Discovery Fund is a multi-cap fund which has been not performing well for last few years and is not among the most popular multi cap fund in market today.
Multi-cap funds are diversified funds, which invest in stocks across market capitalization. That is, their portfolio comprises of large cap, mid-cap and small cap stocks. They are relatively less risky compared to a pure mid cap or a small cap fund and are suitable for not-so-aggressive investors.
ICICI Value Discovery fund has performed really well in past years, but ever since it crossed the AUM of ₹15,000cr the performance has been average. Usually, with large AUM the optimal allocation of funds is difficult.
There are much better options available in market, so it is advisable to change it and invest in other multi-cap funds like:
ICICI Prudential Value Discovery Fund started in 1993 has been giving good returns to the investors since then. It has a huge corpus of more than 10000 crore.
Risk involved in this fund is comparatively less as compared to the benchmark. Its 5 year and 10 year return are higher than the benchmark. If investment in this fund has been made for less than a year, then the investor will be charged an exit load of one percent if he exits.
Ninety percent of the investments are made in equities and the remaining in cash. Investments are made in all segments with the highest allocation to Financial Services and IT.
Few of the top holdings of this fund are:
· Sun Pharmaceuticals Limited
· Larsen and Turbo Limited
· Wipro Limited
· HDFC Bank Limited
· NTPC Limited
Its 1 year and 3 year returns are lower than the benchmark. Moreover returns tend to decrease once Asset Under Management exceeds a certain amount. The risk adjusted returns are also lower than the category. The expense ratio is high for this fund.
This is an equity oriented fund, where more than 80 percent of the investment is made in large cap funds, which shows that the risk involved here is not high. Above mentioned things should be kept in mind while deciding whether to exit the fund or stay invested. Moreover if the investor is looking to stay invested for 5 or more years than this is a good fund, otherwise he can look to switch as per the past records.
The alternate funds that an investor can invest in are: