ICICI Prudential Equity & Debt Fund Review

Published: June 9, 2022 at 6:00 am

While preparing this month’s equity mutual fund screener, something caught our eye. ICICI Prudential Equity & Debt Fund gained 19.8% over the last year (trailing 1Y return) compared to only a 6.2% gain by Nifty 100 TRI (as of 3rd June 2022). So we dig deeper and find out how consistently the Fund has performed wrt Nifty 100 TRI and CRISIL 65:35 Aggressive Hybrid Index.

Disclaimer: Fund performance reports present return and risk analysis of a fund with representative benchmarks and not investment recommendations. It must be expressly understood that the data below reflect only past performance and is in no way an indication of future performance. Our investment recommendations can be found here: Handpicked List of Mutual Funds (PlumbLine).

The last 1Y trailing performance is shown below.

Last one year performance of ICICI Equity and Debt Fund compared with Nifty 100 TRI and CRISIL 65-35 Aggressive Hybrid Index
Last one-year performance of ICICI Equity and Debt Fund compared with Nifty 100 TRI and CRISIL 65-35 Aggressive Hybrid Index.

Readers must not make the mistake of getting carried away by this recent performance and must dig deeper.

The asset allocation history of the ICICI Equity and Debt Fund is shown below. The equity: debt ratio has been fairly stable over the years.


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Asset allocation history of ICICI Equity and Debt Fund
Asset allocation history of ICICI Equity and Debt Fund

The market cap allocation history is shown below. The “others” represents the fixed income (bonds/cash) component. The fund’s large cap orientation is clear from the graph.

Market cap allocation history of ICICI Equity and Debt Fund
Market cap allocation history of ICICI Equity and Debt Fund

We will use three metrics to analyze performance consistency versus benchmarks. Analysis such as this can be found for 350+ equity funds in our monthly mutual fund screener.

1 Rolling return outperformance consistency: the fund returns are compared with category benchmark returns over every possible 3Y,4Y, and 5Y period. Higher the outperformance consistency, the better. Suppose 876 fund returns were compared with 876 benchmark returns, and the Fund has beaten the benchmark 675 times. The consistency score will be 675/876 ~ 77%.

Three years

BenchmarkCrisil6535Nifty 100 TRI
No of rolling return entries Index (3 Years)15781578
No of rolling return entries Fund (3 years)15781578
No of times the Fund has outperformed the index (3 years)11661060
rolling return outperformance Consistency Score (3 years)74%67%

Four years

BenchmarkCrisil6535Nifty 100 TRI
No of rolling return entries Index (4 Years)13331333
No of rolling return entries Fund (4 years)13331333
No of times the Fund has outperformed the index (4 years)1061937
rolling return outperformance Consistency Score (4 years)80%70%

Five years

BenchmarkCrisil6535Nifty 100 TRI
No of rolling return entries Index (5 Years)10851085
No of rolling return entries Fund (5 years)10851085
No of times the Fund has outperformed the index (5 years)889811
rolling return outperformance Consistency Score (5 years)82%75%

That is reasonably consistent outperformance of both indices.

2 Upside performance consistency over every possible 3Y,4Y, 5Y: Higher the better. A score of 70% means, 7 out of 10 times, the Fund performed better than the category benchmark when the benchmark was moving up. This is a measure of reward. It is computed from rolling upside capture data (see link below).

BenchmarkCrisil6535Nifty 100 TRI
upside performance consistency (3 years)69%44%
upside performance consistency (4 years)70%38%
upside performance consistency (5 years)72%41%

The Fund typically does better than the hybrid index when the index is doing well. The opposite is true for Nifty 100 TRI.

3 Downside performance consistency over every possible 3Y,4Y, 5Y. Higher, the better. A score of 60% means, 6 out of 10 times, the Fund performed better than the category benchmark when the benchmark was moving down. This is a measure of risk protection. It is computed from rolling downside capture data. Read more: An introduction to Downside and Upside Capture Ratios.

BenchmarkCrisil6535Nifty 100 TRI
downside protection consistency (3 years)73%96%
downside protection consistency (4 years)68%100%
downside protection consistency (5 years)61%96%

The Fund typically falls lower than both indices when they fall. The performance is expectedly better wrt Nifty 100 because the hybrid index has bonds which offer downside protection.

in summary, ICICI Prudential Equity & Debt Fund has performed consistently and can be considered for long-term goals. However, they must keep in mind that the recent outperformance is unlikely to last and should not be the basis for choosing this Fund.

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