Category: Flexi Cap

    Fund Manager: Sankaren Naren Fund Analyst: Nehal Meshram

Stock selection and cash allocation have been the primary contributors to performance.

    Process: The ability to think differently is critical in this strategy. The fund manager made his mark leveraging contrarian bets.

    Performance: The fund tends to generate higher returns when markets fall and lag when they rally.

ICICI Prudential Dynamic Growth remains a credible investment option with Sankaren Naren's distinct skill of uncovering value opportunities with a judiciously applied investment process, making a strong case for an upgrade of its Morningstar Analyst Rating to Gold from Silver. Over time, Naren has proved himself as an astute portfolio manager with his ability to think differently and pick stocks that have the potential to generate higher returns. Naren is backed by comanager Ihab Dalwai and a highly cohesive investment team, contributing unique investment ideas that are debated rigorously. Manish Gunwani's departure and other portfolio manager reshuffles have somewhat hampered continuity, but ICICI's focus on internal talent development and incentives promotes longevity and advance succession planning.

 ICICI Prudential Dynamic Plan long-standing process is research based with a mix of top-down and bottom-up styles. The fund follows a multi-cap approach across segments, with a tilt towards value stocks that have long-term growth potential. When markets run up and valuations seem stretched, reducing net equity exposure in the portfolio is critical in this strategy.

Naren deploys a rules-based approach using the historical price/book value of the market to determine fair value and in turn tweak cash allocations. He backs his conviction, even if it means underperforming over shorter time frames. He takes sector bets and aggressively trades his large-cap picks, but such tactics are not without risk. In a sustained bull run, the price/book model will point towards a higher allocation to cash, which may lead the fund to underperform its peers.

The value tilt requires significant patience, as value stocks can underperform growth stocks for lengthy periods. Nevertheless, the fund has a sound record of delivering decent long-term returns. There are inevitable periods of underperformance when the value style is out of favour, but the fund's dynamic allocation managed to provide cushion to the portfolio during the downturn. Its low expense ratio also helps.

 ICICI Prudential Dynamic Plan fund remains a solid choice for investors seeking contrarian instincts and who are comfortable with the related volatility.