Is It Right to Invest in ICICI Prudential Value Discovery Fund Despite Its Past Performance?

Time to exit was long back, my friend. Read the below answer in fact, you lost money while investing in ICICI Pru Value Discovery Fund. Vipul Shah's answer to What is your view on ICICI Prudential Value Discovery Fund may be of great value to you.

Introduction

First and foremost, one must remember that past performance is not an indication of how the funds will perform in the future.

Investors often get carried away by the numbers of past performance, driven by various factors. In this article, we will explore some of these factors and the importance of making an informed decision, using ICICI Prudential Value Discovery Fund as a case study. This information is meant to assist you in making your financial decisions independently, rather than relying purely on the guidance of third parties.

Overview of ICICI Prudential Value Discovery Fund

Before delving into the specific details, it is important to have a brief understanding of the ICICI Prudential Value Discovery Fund. Here's a rundown of the key factors:

Key Features

Manager: ICICI Prudential Mutual Fund - a reliable fund house from my experience Category: Equity-Multicap - diversified investment profile Expense Ratio: 1.05 (Direct Plan) - cost-effective; 2.15 (Regular Plan) - less advised Risk Grade: Below Average - suits a moderate-risk investor's profile Return Grade: Above Average - potential for decent returns over a longer period Type: Open-ended - flexibility to add or withdraw money at any time Minimum SIP Investment: 500 Rs - advantage for investors with a smaller starting capital

The fund primarily allocates its investments across giant, large, mid, and small-cap companies, reflecting a diverse investment portfolio.

Portfolio Distribution

Giant Cap: 72.15% Large Cap: 10.87% Mid Cap: 15.54% Small Cap: 1.44%

Majority of the fund is focused on investing in giant and large-cap companies, indicating a higher level of safety with slower growth rate. This type of portfolio is suitable for investors looking for steadily good returns over a longer period of 10-15 years.

Sector-wise Allocation

The latest data is courtesy of ICICI Prudential Value Discovery Fund and shows that the asset is fairly distributed across five major sectors: financial technology, energy, construction, and healthcare.

These sectors will largely determine the performance of the fund over the course of your investment. For instance, if you distribute your investment over a period of 10-15 years, you may see decent returns, given the current allocation.

Performance of Major Companies

A significant factor to consider is the performance of the top companies in which the fund is currently invested.

Giant Cap: HDFC Bank Giant Cap: LT (LT) Mid Cap: Wipro Mid Cap: Sun Pharma Mid Cap: Infosys

Performing a quick analysis of the performance of these companies over the past few years can help you gauge the reasons behind the fund's past performance. If you can predict their future growth or simply have faith that they will continue to grow, it is a good sign for your investment.

Conclusion and Investment Strategy

For a long-term investment plan of 15 years, distributing your investment over time through a Systematic Investment Plan (SIP) may yield better returns, according to my personal experience of interacting with many investors.

One-time investment is not advisable, especially if you are not an expert in the field. I personally advocate for SIP as it allows for regular, disciplined investments and acts as a protective tool against market volatility.

It is important to note that the information provided is the author's personal opinion, and readers are encouraged to make informed decisions using their own understanding and insights.

Happy Investing!