ICICI Prudential Multicap Fund Review: Can it be the only equity fund in our portfolio

Last Updated on

If you explore the list of multicap mutual funds, something strange might catch your eye.  ICICI Prudential Multicap Fund started in October 1994 has only an AUM of about 3600 Crores. Let us find out how this fund has performed keeping in mind its evolution over time.

ICICI Prudential Multicap Fund: History

Some mutual funds are like IPL teams that can never quite get the combination right. Even CSK, perhaps for the first time had this trouble this year. One can learn a lot by studying mutual fund factsheets. ICICI Prudential Multicap Fund has had multiple avatars in the past. It started out as Pru Power Fund that can invest in “core sector and associated feeder industries”

It has. for the most part of its existence, remained a large and midcap (~ 10%) fund, sometimes promoted as a fund that could invest in  “a concentrated multi-sector portfolio”. By April 2011, ICICI Prudential Power became ICIC Prudential Top 200 fund. It still had nifty as a benchmark and classified as a large and midcap fund.

By October 2015, ICIC Top 200 Fund became ICICI Prudential Multicap Fund and still a large and midcap fund.  Its product label was:  A growth-oriented equity fund that invests in equity and equity-related securities of core sectors and associated feeder industries

ICICI Prudential Multicap Fund Review: Can it be the only equity fund in our portfolio?

It was only in early 2017, the benchmark was changed to BSE 200 (although there is not much of a difference in returns). All this while the benchmark was only Nifty while the fund was a large and midcap fund. Until April 2018, it remained a full invested large and midcap fund. That is, it’s bond allocation was only 5% (max).

Since then it has become a multicap fund with some small-cap exposure and the freedom to invest up to 35% in fixed income and the benchmark was changed from BSE 200 to BSE 500. The fund has seen 7 fund managers from 2006 with ICIC’s Dhoni adding himself as co-fund manager from Oct 2018.

The since inception performance in comparison to its present benchmark is not a pleasant sight, but we will have to dig deeper.ICICI Prudential Multicap Fund since inception performanceICICI Prudential Multicap Fund since inception performance. Courtesy Value Research

Considerations

The fund has been a large and midcap fund for most of its existence. Although the above graph does not portray the fund in good light, it does have a reasonable record of downside protection. That is, whenever the index fell (over a month), the fund typically fell less. The fund has only captured 89% of benchmark losses over the last 10 years, 78% over the last 5 years and 83% over the last 3 years. It is reasonable to expect the same kind of performance in its new avatar.

ICICI Prudential Multicap Fund vs Nifty

The fund has managed to consistently beat the Nifty over 10Y and since late 2013 over 5Y at a lower risk.

ICICI Prudential Multicap Fund vs Nifty 3 and 5 year rolling returns

ICICI Prudential Multicap Fund vs Nifty 10 year rolling returns and risk

 

ICICI Prudential Multicap Fund vs Peers

A comparison with Franklin India Equity Fund (Prima Plus), ABSL Equity and Kotak Standard Multicap shows that the ICICI fund is neither an outperformer or an underperformer. The Franklin fund has had lower volatility and a bit more return.

CICI Prudential Multicap Fund vs Peers: 5Y returns

CICI Prudential Multicap Fund vs Peers: 5Y risk

Can ICICI Multicap be the only equity fund in our portfolio?

First of all, a multicap fund in a portfolio makes sense only if it is the only fund. Second of all, even though the term multicap brings about an idea of equal exposure to large,mid and small cap stocks, for most investors a large cap core and mid and small cap satellite portfolio will be the best suited. Third of all, large AUM multicap funds tend to become large and midcap or large capish funds.

Considering the above, and the performance of ICICI Multicap fund, if you are looking for a “quiet”, relatively unpopular fund, then yes, this fund can work as the only fund in an equity portfolio. However, if you start diluting its role by adding on more funds, then its utility will quickly vanish.

Do share if you found this useful

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)
Want to conduct a sales-free "basics of money management" session in your office?
I conduct free seminars to employees or societies. Only the very basics and getting-started steps are discussed (no scary math):For example: How to define financial goals, how to save tax with a clear goal in mind; How to use a credit card for maximum benefit; When to buy a house; How to start investing; where to invest; how to invest for and after retirement etc. depending on the audience. If you are interested, you can contact me: freefincal [at] Gmail [dot] com. I can do the talk via conferencing software, so there is no cost for your company. If you want me to travel, you need to cover my airfare (I live in Chennai)

Connect with us on social media


Content Policy

Freefincal has original unbiased, conflict-of-interest-free,  topical reports, reviews, commentary and analysis on all aspects of personal finance like mutual funds, stocks, insurance etc. All guest authors and contributors to the site also do not have any conflict of interest. If you find the content useful, please consider supporting us by (1) sharing our articles and (2) disabling ad-blockers for our site if you are using one. No promotional content We do not accept sponsored posts and link exchange requests from content writers and agencies. This is our privacy policy Our website is non-profit in nature. The revenue from the advertisement will only be used for hosting charges, domain registration charges, specific plugins necessary for traffic growth and analytics services for search engine optimisation.

Do check out my books


You Can Be Rich Too with Goal-Based Investing

You can be rich too with goal based investingMy first book is meant to help you ask the right questions, seek the right answers and since it comes with nine online calculators, you can also create custom solutions for your lifestyle! Get it now.  It is also available in Kindle format.
Gamechanger: Forget Startups, Join Corporate & Still Live the Rich Life You WantGamechanger: Forget Start-ups, Join Corporate and Still Live the Rich Life you wantMy second book is meant for young earners to get their basics right from day one! It will also help you travel to exotic places at low cost! Get it or gift it to a young earner

The ultimate guide to travel by Pranav Surya

Travel-Training-Kit-Cover This is a deep dive analysis into vacation planning, finding cheap flights, budget accommodation, what to do when travelling, how travelling slowly is better financially and psychologically with links to the web pages and hand-holding at every step.  Get the pdf for ₹199 (instant download)

Free Apps for your Android Phone

All calculators from our book, “You can be Rich Too” are now available on Google Play!
Install Financial Freedom App! (Google Play Store)
Install Freefincal Retirement Planner App! (Google Play Store)
Find out if you have enough to say "FU" to your employer (Google Play Store)

Blog Comment Policy

Your thoughts are vital to the health of this blog and are the driving force behind the analysis and calculators that you see here. We welcome criticism and differing opinions. I will do my very best to respond to all comments asap. Please do not include hyperlinks or email ids in the comment body. Such comments will be moderated and I reserve the right to delete the entire comment or remove the links before approving them.

5 Comments

  1. Professor, in the ICICI Prudential Multicap Fund vs Nifty section, the graphs are showing Aditya Birla Sun Life Equity fund instead of ICICI fund.

  2. Thanks Pattu for the detailed analysis of ICICI Prudential Multicap Fund. Can you also please review UTI Equity Fund when you have the time ?

  3. S Naren(ICICI Dhoni) is always cautious when markets rise, that makes their funds work well during bear and hence gives good downside protection imo.

  4. Hi Sir, why do you say that a multi cap fund makes sense only if it is the only fund. Can’t a multi cap fund (which is primarily large cap, say, like the Parag Parikh Long Term Equity fund) function as the core with a small (say, 20-25 percent) allocation to one or two mid cap funds?

Leave a Reply

Your email address will not be published. Required fields are marked *