ICICI Prudential Bluechip Fund (Focused Bluechip): Great past, but will it last?

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ICICI Prudential Focused Bluechip was launched in May 2008 right in the middle of the 2008 meltdown Armed with a lean AUM and 20-twenty stock mandate, the management could navigate the crisis well and soon became the darling of both the sales and investment community. Here is why the going will be tough for this (and other large cap funds).

The main reason I am writing this post is because I wanted to test a new feature to the monthly fund screeners. As many know, I use rolling returns over 3.4 and 5 years. I count the total no of such returns and find out how many among these the fund beat the index.

 

Suppose we find the fund beat the index 600/700 times  when a 3-year window is considered. That is good, but the 100 poor returns could have come just in the last year. Meaning a dip in performance. So besides finding overall return outperformance consistency, we could compute this in 2018, 2017, 2016 etc. This slices the performance window finer. This is still experimental, and I thought I would share numbers for ICICI Prudential Bluechip Fund in this post.

ICICI Prudential Bluechip Fund: Background

ICIC Bluechip fund is among the Five Large Cap funds have comfortably beat Nifty 100! Unfortunately, the reason for this is not flattering. Prior to the SEBI categorization rules defined large caps as the top 100 in terms of market cap, this fund (and others) could pick stocks from the top 200 (meaning 100 midcaps as per current definition). It also had a nice and easy Nifty 50 as the benchmark to beat. Now it can only pick 80% of stocks from Nifty 100.

When it started out, it has 20 stock mandate and the outperformance even with respect to Nifty 100 was huge. However, it had a clause that the number of stocks could increase when the AUM grew higher than 1000 crore. The fund kept the portfolio down to 20 stocks until Dec. 2011 at about 3000 Cr AUM levels.

ICICI Prudential Bluechip Fund (Focused Bluechip): Performance Review with NAV movement

  1. Go to the Value Research fund page
  2. In the performance tab, select 3 years and scroll the horizontal bar all the way to left (since inception)
  3. Now move the bar right. The 3 year window will move forward in time.
  4. Notice the performance and the from date. The performance when the from-date was before Jan 2012 is higher
  5. After that, the outperformance wrt Nifty 100 has dropped significantly because the no of stocks kept increasing as the AUM swelled.

Now, although I cannot for say for sure, it is fair enough to suspect performance dropped when the portfolio got diluted and the fund became more and more largecapish. That is from Nifty 200 to Nifty 100 ( or 50)

Slicing the rolling returns (as on Jan 9h 2019)

One year periods: The fund has beat Nifty 100 TRI 1079 out of 1219 times.

Two year periods: Fund beat Nifty 100 TRI 890/971 times

Three year periods: 726/727 times

Four year periods 481/481 times

Five year periods 239/239 times

That is spectacular.

If we look at the 3Y periods more closely:

Between 2013 to 2016: The fund had a 100% outperformance record. It beat Nifty 100 TRI all 247 times.

Between 2014 to 2017: Again 100% outperformance, all 241 times

Between 2015 to 2018: Pretty much 100% 238/39 times. So that is practically spotless.

For these windows, one can also find out the number of times, ICICI Bluechip fund return was 10% higher than the index

Between 2013 to 2016: It was always 10% higher!

Between 2014 to 2017: It was always 10% higher!

Between 2015 to 2017, it was 10% higher 147 out of 239 times. So 61%.

This piece of data the visual exercise suggested above seem proof enough that ICICI Prudential Bluechip Fund is unlikely to repeat its past magic. That said, the fund management must be credited for a fantastic performance.

I will improve the slicing mentioned above. If you have any ideas let me know

Existing investors

Hold and continue to invest as long personal performance is satisfactory.

New investors

Give this fund a miss. Want alternatives? Pick from My Handpicked Mutual Funds January 2019 (PlumbLine)

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About the Author M Pattabiraman author of freefincal.comM. Pattabiraman(PhD) is the author and owner of freefincal.com.  He is an associate professor at the Indian Institute of Technology, Madras since Aug 2006. Pattu” as he is popularly known, has co-authored two print-books, You can be rich too with goal based investing (CNBC TV18) and Gamechanger and seven other free e-books on various topics of money management.  He is a patron and co-founder of “Fee-only India” an organisation to promote unbiased, commission-free investment advice. Pattu publishes unbiased, promotion-free research, analysis and holistic money management advice. Freefincal serves more than one million readers a year (2.5 million page views) with numbers based analysis on topical issues and has more than a 100 free calculators on different aspects of insurance and investment analysis. He conducts free money management sessions for corporates  and associations(see details below). Previous engagements include World Bank, RBI, BHEL, Asian Paints, TamilNadu Investors Association etc. Contact information: freefincal {at} Gmail {dot} com (sponsored posts or paid collaborations will not be entertained)
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3 Comments

  1. This fund performance has gone down after change in fund manager in 2018 Do you still suggest holding this fund for existing investors?

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