ICICI Prudential Value Discovery Fund: Underperforming and Your Options
Investors looking to diversify their investment portfolio might consider value investing, but the ICICI Prudential Value Discovery Fund, an equity fund known for its value investing strategy, has not been generating the expected returns. Upon inception in October 2017, your monthly Systematic Investment Plan (SIP) of Rs. 2,000 has yielded a disappointing negative 0.42% return. This article delves into why the fund is underperforming and what steps you can take to maximize your returns.
Understanding Value Fund Performance
Value funds aim to invest in companies that are undervalued, based on their fundamental characteristics. Unlike growth funds, which focus on companies with high growth potential, value investing requires fund managers to wait for stocks to become undervalued before purchasing them. This strategy, although beneficial for long-term investments, can result in underperformance in the short term. The current underperformance of the ICICI Prudential Value Discovery Fund is due to the selection of undervalued stocks that have not appreciated as expected.
Underperformance of ICICI Prudential Value Discovery Fund
The ICICI Prudential Value Discovery Fund, which primarily invests in technology, auto, and pharmaceutical sectors, has underperformed significantly. Over the past three years, the fund has recorded a loss of 2%. This poor performance is attributed to the underperformance of the top-three sectors in which the fund invests.
To address this issue, it is advisable to exit the scheme and consider shifting to a pure multi-cap or focused fund. Options like the Axis Multi-Cap or Axis Focused Fund offer a more diversified investment approach, potentially leading to better returns. Should you still prefer an equity fund, consider the ICICI Blue Chip Fund, which may be more suitable for your investment goals.
Should You Continue with SIP in ICICI Prudential Value Discovery Fund?
Given the underperformance of the ICICI Prudential Value Discovery Fund, it is crucial to reassess your investment strategy. If you are considering continuing your SIP, it is recommended that you explore other fund options that are more likely to meet your return expectations.
For instance, switching to a Multi-Cap Fund can be a prudent decision. Funds like the Kotak Standard Multi-Cap or the Motilal Oswal Multi-Cap 35 Fund offer a balanced approach to equity investment, diversifying across various sectors to mitigate risk and enhance returns. These funds are more likely to offer better performance and stability over the long term.
Conclusion
The critical takeaway is that if your SIP in ICICI Prudential Value Discovery Fund has been underperforming and not meeting your investment goals, it may be wise to reconsider your investment strategy. By exploring other fund options such as a Multi-Cap or a focused fund, you can maximize your returns and align your investment goals with your risk tolerance.
For detailed information on the performance of these funds or to start a SIP in a more suitable scheme, consult with your financial advisor or visit the official websites of the prescribed fund houses.