Latest news with #ICICIPrudentialQualityFund
Economic Times
13-05-2025
- Business
- Economic Times
ICICI Prudential's quality-focused pitch for long-term gains
As markets tread cautiously in a world of stretched valuations and tempered earnings expectations, ICICI Prudential AMC is turning the spotlight back on an old faithful—quality. In this edition of Fund Manager Talk, Ihab Dalwai, Senior Fund Manager, makes a case for why it's time to revisit this underappreciated theme as a long-term portfolio anchor. ADVERTISEMENT Edited excerpts from a chat: Markets are marching to a new tune amid all the stress around tariff war and Indo-Pak tensions. How are you reading this phase, and what's your outlook for equity markets in FY26? We believe the market is likely to remain volatile in the near term owing to various uncertainties in the form of trade tariffs, potential US slowdown, geo-political tension to name a few. On the domestic front, even though certain pockets in the market have seen sizable corrections, valuations continue to remain above average. Also, going forward, earnings growth trajectory is likely to moderate. As a result, we believe the upside expectations should be calibrated in line with earnings a year where earnings surprises are mixed and macros are wobbling, what's your compass as a fund manager—valuation comfort, earnings resilience, or thematic plays?Reasonable valuation and earnings resilience is important. Moreover, scouting for ideas generally happens in underperformed, under owned segments of the market where expectation is muted. ADVERTISEMENT Let's talk about the ICICI Prudential Quality Fund. What makes this fund timely in today's volatile, valuation-sensitive environment? Quality as a theme has underperformed the broader market over the past four-five years. This indicates a lack of investor interest resulting in reasonable valuation, making it a good entry point if one adopts a long term investment philosophy. In the backdrop of the current global economic uncertainty, and moderate earnings growth expectation from corporate India, we believe this is an optimal time to consider the quality would argue that the 'quality' segment has already had its day in the sun. Why do you think now is the time to double down on it? Over the past few months, quality as a theme has gathered pace in terms of performance. But that should not deter investors from considering quality, especially long term investors, as this theme is just coming off from a 4-5-year underperformance phase. ADVERTISEMENT The fund promises to flex across sectors and market caps. Could you decode how that flexibility plays out in practice? Is it more bottom-up conviction or macro-driven allocation? We believe there are quality names available across sectors and market capitalisations. From a portfolio construction perspective, we aim to reduce sector concentration. There will be active bottom up stock picking within the mid and small cap space. Over time, our sector preferences will be reflective in our portfolio positioning. Is this fund an all-weather bet or should investors treat it as a satellite allocation—especially with value and momentum themes still buzzing? We believe quality based offering is an all-weather fund, especially at a time when this style is coming off after a period of underperformance. Generally, if one invests in high quality companies with robust management which can allocate capital well, the earnings tend to compound for a long period. Hence this strategy can be looked at for long term investments. ADVERTISEMENT The fund has high ROE, ROIC, and sound capital allocation as selection filters. But in a world crowded with data, how do you spot quality before it becomes consensus? Generally, when it comes to quality investing, the consensus or non-consensus view is not on earnings growth but on sustainability and durability of moat which is helping the company earn its high ROE. A large part of the return in quality investing is generated when the market believes that the moat believed in is not sustainable while the investee company is able to earn high ROE for an extended period and is also able to reinvest for growth. With the Quality Fund entering a space where the growth versus value debate is heating up, what's your message to investors still sitting on the fence? Historically, quality as a strategy has worked well for even those investors who are not very aggressive on the risk spectrum as the risk adjusted return for quality has been superior to the broader market and most other styles of investing. Hence if an investor is looking for a fully invested equity scheme to allocate to, then they may consider this quality based offering. ADVERTISEMENT (You can now subscribe to our ETMarkets WhatsApp channel)
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Business Standard
07-05-2025
- Business
- Business Standard
Rs 1 Lakh to Rs 26.8 Lakh: Can the Quality Index outrun the Nifty 200?
Over the past two decades, investing in 'quality' has paid off. Since April 2005, Rs 1 lakh invested in the Nifty 200 Quality Index would have grown to Rs 26.8 lakh, nearly doubling the ₹14.5 lakh return from the broader Nifty 200 TRI over the same period. This outperformance raises a key question for investors: what exactly is a quality stock, and should it be a core part of your investment strategy? Source: NSE Indices Ltd. Data as on March 31,2025. Past performance may or may not be sustained in the future. For indices TRI value is used A Quality Index is a stock market index that tracks companies with strong fundamental characteristics—typically those considered financially healthy, stable, and efficiently managed. Performance of Quality Strategy Historical data shows that the quality style has demonstrated good risk-adjusted returns and greater return predictability compared to value, momentum, and alpha strategies: On a 5-year daily rolling return basis, the quality strategy delivered an average return of 17.4% with the risk-adjusted return ratio (RAR) of 3.3 Since April 2005, an investment of Rs 1 lakh in the quality index would have grown to Rs 26.8 lakh, compared to ₹14.5 lakh for the broader Nifty 200 TRI. Source: NSE Indices Ltd. Data as on March 31, 2025. The Investment Period is considered from April 2005 to April 2020. Returns are considered from April 2010 to March 2025. Past performance may or may not be sustained in the future. RAR: Risk Adjuste ICICI Prudential Mutual Fund on Monday launched the ICICI Prudential Quality Fund, an open-ended equity scheme following the Quality Factor as theme. This New Fund Offer (NFO) opens on May 6, 2025 and closes on May 20, 2025. The scheme aims to invest in companies that exhibit stronger fundamentals such as high return on equity (ROE), robust cash flows, low financial leverage, and a history of sound capital allocation. These factors, combined with a reasonable valuation approach, can form the backbone of the scheme's stock selection strategy. 'In today's environment of economic uncertainty and moderating growth, business with sound financials and sustainable profitability stand out. ICICI Prudential Quality Fund aims to tap into this potential by selecting high quality* companies available at reasonable valuations, thereby aiming to build a resilient portfolio designed to perform across market cycles. With attractive valuations in the quality segment, we believe this is an opportune time for investors to adopt a quality-focused strategy," said Sankaran Naren, ED & CIO of ICICI Prudential AMC. Why invest in quality now? Amid growing global economic uncertainties, including geopolitical tensions, elevated interest burdens, and a moderating domestic earnings cycle, the AMC believes that quality stocks can weather the storm. These companies generally outperform in periods of volatility due to their sound balance sheets and growth records. While the quality theme had underperformed broader markets and other styles like momentum, value and alpha in recent years, this has resulted in more attractive entry valuations today. Data as on March 31,2025. Returns are on absolute basis Past performance may or may not be sustained in the future. FY: Financial Year. For Quality: Nifty 200 Quality 30 TRI, for Value: Nifty 200 Value 30 TRI, for Momentum: Nifty 200 Momentum 30 TRI, Flexible & Research-Driven Approach The ICICI Prudential Quality Fund will follow a flexible investment strategy, drawing from both top-down (macro and sector-level) and bottom-up (company-specific) research. It will help maintain the flexibility to invest across sectors and market caps. The fund's portfolio construction process involves narrowing down a universe of approx 625 companies to around 40–60 names, based on stringent quality and valuation filters. Scheme Details:
