Last Updated on December 29, 2021 at 12:01 pm
This is a performance review of ICICI Prudential Equity & Debt Fund (previously called ICICI Balanced) and a comparison with ICICI Prudential Balanced Advantage Fund. Let us find out how these funds have fared against equity benchmarks and discuss when to choose which fund. Let us start with the basics.
What is the difference between a balanced fund and a balanced advantaged fund?
I have discussed this difference in detail before: Balanced Advantage vs Aggressive Hybrid Funds: When to use what. The essential idea is that a balanced fund or aggressive hybrid fund as they are called now hold a minimum of 65% direct equity and up to 80%. The rest in bonds. In a balanced advantage fund, the direct equity allocation can swing from 40% to 80% depending on market conditions. To maintain equity fund status, the fund manager will use derivatives (arbitrage) to ensure min 65% effective equity.
Therefore, the balanced advantage fund or dynamic asset allocation fund will use market timing models while the balanced fund or aggressive hybrid fund typically will not.
As previously discussed ICICI Prudential Balanced Advantage Fund: packs performance with low volatility and is a fantastic first fund for new equity investors who are scared of market volatility. In this post, let us see why ICICI Prudential Equity & Debt Fund is also a good choice for any investor who does not mind a bit more risk and a decent chance of higher returns.
Join over 32,000 readers and get free money management solutions delivered to your inbox! Subscribe to get posts via email! 🔥Enjoy massive discounts on our robo-advisory tool & courses! 🔥
ICICI Prudential Equity & Debt Fund: About the fund
Launched in Nov 1999, the fund has grown in popularity and size to about 26.7 thousand crores Co-managed by ICICI’s go-to man Sankaran Naren since Dec 2015. You can expect this fund to follow the general philosophy adopted by Value Discovery, Balanced Advantage and Dynamic Fund (multi-asset).
That is a mix of growth and value style investing with a dash of PB based market timing. Since there is not much scope in the asset allocation for variations, the timing element is not expected to play a significant role. The debt part of the portfolio can also be expected to take duration calls depending on interest rate movements.
There can be no doubt that Naren is one of the (if not, the) best fund managers in the country. However he now “manages” about 40 funds (many of them closed-ended)!! Over the years, one could see that whenever a fund was in trouble or when the AMC decided to push a type of fund, Naren would be added as a fund manager. The result was almost always positive.
This, however, could also be the biggest drawback. Too much dependence on Naren. On the basis of regular dividends, the AUM in both ICICI Prudential Equity & Debt Fund and balanced advantage has rapidly swelled in the recent past. So how long the performance will last, how long will the Naren magic last are concerns that both investors and potential investors have to consider.
Rolling returns and risk (3,4,5 years)
In what follows let us look at rolling returns and rolling risk over 3,4,5 years. This is a pretty short period though. The comparison will include balanced advantage, NIfty 100 and Nifty 100 Equal Weight. The fund itself is benchmarked to Crisil Aggressive Hybrid with 65% of NIfty, but that is too easy a benchmark to beat.
Also, in this age of index investing, it makes perfect sense for active investors to choose hybrid funds with guaranteed lower risk (compared to equity indices) and comparable or even better returns. Of during huge bulls runs, hybrid funds may not shine as much but that is not as important as the performance during bear markets.
Three years
Four years
Five years ![ICICI Prudential Equity & Debt Fund Five year rolling returns and risk](data:image/svg+xml,%3Csvg%20xmlns=%22http://www.w3.org/2000/svg%22%20viewBox=%220%200%201165%201082%22%3E%3C/svg%3E)
That is pretty awesome! Compared to Nfity 100, ICICI Prudential Equity & Debt Fund has delivered higher returns at lower and balanced advantage has delivered comparable returns at even lower risk!
Of course, it is important to keep in mind that this is over a short time frame and the return outperformance may not last. The point is that it need not! You should still get decent returns are lower risk.
Compared to the Equity and Debt fund, Balanced advantage is lower-risk, lower-return option but it is expected and not a problem.
Performance Fingerprint (5 years)
This is the performance fingerprint of ICICI Equity and Debt fund vs Nifty 100 TRI. Monthly returns are compared and binned into four categories as shown below.
That is pretty awesome for a hybrid fund compared with a pure equity index. Of course, this is due to the small debt allocation and periodic rebalancing cushion the fund during bad market movements. So people who think higher equity means higher returns are wrong.
This is the reason why I keep saying, if you are worried about index funds, then shift your portfolio to active hybrid funds. You will get guaranteed lower risk, decent returns that often might beat equity index returns and the expense ratio is justified. You can learn more about this here:
Summary
So in conclusion, ICICI Prudential Equity & Debt Fund is a compelling pick provided the investor is wary of sudden jumps in AUM and dependence on Naren for outperformance. It is important to keep in mind that we have only considered a small slice of history and outperformance of pure equity indices may not always be possible. So invest with an understanding of risk and reward.
Video Version of the review
Check out the latest video and other fund reviews from the freefincal youtube channel
🔥Enjoy massive discounts on our courses, robo-advisory tool and exclusive investor circle! 🔥& join our community of 5000+ users!
Use our Robo-advisory Tool for a start-to-finish financial plan! ⇐ More than 1,000 investors and advisors use this!
New Tool! => Track your mutual funds and stock investments with this Google Sheet!
We also publish monthly equity mutual funds, debt and hybrid mutual funds, index funds and ETF screeners and momentum, low-volatility stock screeners.
![Follow Freefincal on Google News Follow Freefincal on Google News](https://freefincal.com/wp-content/uploads/2023/07/Follow-Freefincal-on-Google-News.jpg)
![Subscribe to the freefincal Youtube Channel Subscribe to the freefincal Youtube Channel. Subscribe button courtesy: Vecteezy.](https://freefincal.com/wp-content/uploads/2023/07/Subscribe-to-the-freefincal-Youtube-Channel.jpg)
![Follow freefincal on WhatsApp Channel Follow freefincal on WhatsApp Channel](https://freefincal.com/wp-content/uploads/2023/09/Follow-freefincal-on-WhatsApp-Channel-300x83.jpg)
![Listen to the Lets Get Rich with Pattu Podcast Listen to the Lets Get Rich with Pattu Podcast](https://freefincal.com/wp-content/uploads/2023/07/Listen-to-the-Lets-Get-Rich-with-Pattu-Podcast.jpg)
![Lets Get RICH With PATTU podcast on YouTube Lets Get RICH With PATTU podcast on YouTube](https://freefincal.com/wp-content/uploads/2023/08/Lets-Get-RICH-With-PATTU-podcast-on-YouTube-644x362.jpg)
- Do you have a comment about the above article? Reach out to us on Twitter: @freefincal or @pattufreefincal
- Have a question? Subscribe to our newsletter using the form below.
- Hit 'reply' to any email from us! We do not offer personalized investment advice. We can write a detailed article without mentioning your name if you have a generic question.
Join over 32,000 readers and get free money management solutions delivered to your inbox! Subscribe to get posts via email!
About The Author
![Pattabiraman editor freefincal](https://freefincal.com/wp-content/uploads/2019/11/Pattabiraman-author-freefincal-article-bottom.jpg)
Our flagship course! Learn to manage your portfolio like a pro to achieve your goals regardless of market conditions! ⇐ More than 3,000 investors and advisors are part of our exclusive community! Get clarity on how to plan for your goals and achieve the necessary corpus no matter the market condition is!! Watch the first lecture for free! One-time payment! No recurring fees! Life-long access to videos! Reduce fear, uncertainty and doubt while investing! Learn how to plan for your goals before and after retirement with confidence.
Our new course! Increase your income by getting people to pay for your skills! ⇐ More than 700 salaried employees, entrepreneurs and financial advisors are part of our exclusive community! Learn how to get people to pay for your skills! Whether you are a professional or small business owner who wants more clients via online visibility or a salaried person wanting a side income or passive income, we will show you how to achieve this by showcasing your skills and building a community that trusts and pays you! (watch 1st lecture for free). One-time payment! No recurring fees! Life-long access to videos!
Our new book for kids: “Chinchu Gets a Superpower!” is now available!
![Both boy and girl version covers of Chinchu gets a superpower](https://freefincal.com/wp-content/uploads/2021/02/Article-bottom-Chinchu-gets-a-superpower-front-cover-for-girls-and-boys.jpg)
![Feedback from a young reader after reading Chinchu gets a Superpower (small version)](https://freefincal.com/wp-content/uploads/2021/02/For-bottom-Feedback-from-a-young-reader-after-reading-Chinchu-gets-a-superpower.jpg)
Must-read book even for adults! This is something that every parent should teach their kids right from their young age. The importance of money management and decision making based on their wants and needs. Very nicely written in simple terms. - Arun.Buy the book: Chinchu gets a superpower for your child!
How to profit from content writing: Our new ebook is for those interested in getting side income via content writing. It is available at a 50% discount for Rs. 500 only!
Do you want to check if the market is overvalued or undervalued? Use our market valuation tool (it will work with any index!), or get the Tactical Buy/Sell timing tool!
We publish monthly mutual fund screeners and momentum, low-volatility stock screeners.
About freefincal & its content policy. Freefincal is a News Media Organization dedicated to providing original analysis, reports, reviews and insights on mutual funds, stocks, investing, retirement and personal finance developments. We do so without conflict of interest and bias. Follow us on Google News. Freefincal serves more than three million readers a year (5 million page views) with articles based only on factual information and detailed analysis by its authors. All statements made will be verified with credible and knowledgeable sources before publication. Freefincal does not publish paid articles, promotions, PR, satire or opinions without data. All opinions will be inferences backed by verifiable, reproducible evidence/data. Contact information: letters {at} freefincal {dot} com (sponsored posts or paid collaborations will not be entertained)
Connect with us on social media
- Twitter @freefincal
- Subscribe to our YouTube Videos
- Posts feed via Feedburner.
Our publications
You Can Be Rich Too with Goal-Based Investing
![You can be rich too with goal based investing](https://freefincal.com/wp-content/uploads/2016/11/You-can-be-rich-243x300.jpg)
Gamechanger: Forget Startups, Join Corporate & Still Live the Rich Life You Want
![Gamechanger: Forget Start-ups, Join Corporate and Still Live the Rich Life you want](https://freefincal.com/wp-content/uploads/2017/05/2-mini-Cover-pink.jpg)
Your Ultimate Guide to Travel
![Travel-Training-Kit-Cover-new](https://freefincal.com/wp-content/uploads/2019/11/Travel-Training-Kit-Cover-new.jpg)