ICICI Pru Multi Asset Fund: Offering Diversification Across Multiple Asset Classes

ICICI Pru Multi Asset Fund is a contrarian style Multi Asset Allocation Fund that has done exceptionally well in the current bull phase. It is the oldest and the most popular fund in the category that has rewarded its investors with superior risk-adjusted returns over the long term.

Launched in October 2002, ICICI Pru Multi-Asset Fund is the erstwhile ICICI Pru Dynamic Plan that is now categorised under Multi-Asset Funds. Under its current mandate, the fund aims to provide the agility of equities, regular income through debt instruments, and a hedge against inflation through an allocation in gold. ICICI Pru Multi-Asset Fund invests predominantly in equities, having an average exposure of about 65-70% in the segment.

The fund manager adopts a contrarian approach by remaining underweight in those sectors to which the larger market holds an elevated exposure. Apart from equities, the fund also invests in derivatives, debt and money market instruments, gold (via ETFs and ETCDs), and REITs & InvITs for diversifying the portfolio.

ICICI Pru Multi-Asset Fund has a track record of performing exceptionally well during bull market phases even though it has often struggled during bearish phases. Notably, the fund has registered a growth of 21.5% CAGR since its inception. Its superior performance over various time frames in the past has attracted investors' attention, making it the largest fund in the Multi-Asset Allocation category.

In the last five years, ICICI Pru Multi-Asset Fund has grown at a compounded annualised growth rate of around 20.2% against a growth of 14.5% in the CRISIL Hybrid 35+65 Aggressive Index. An investment of Rs 10,000 in ICICI Pru Multi-Asset Fund five years back would have now appreciated to Rs 24,903, compared to a valuation of Rs 19,610 in the CRISIL Hybrid 35+65 Aggressive Index.

ICICI Pru Multi-Asset Fund has recorded an extraordinary performance over various time frames in the past. Though the fund underperformed during the market crash of 2020, it made a strong comeback in the ensuing bull phase to stand among the category toppers. In the last 2-year and 3-year period, the fund has outpaced the category average and the benchmark by a margin of around 7-11 percentage points.

Over the longer 5-year to 7-year period too ICICI Pru Multi-Asset Fund stands among the top quartile performers in the Multi-Asset Allocation fund category and has outpaced the CRISIL Hybrid 35+65 Aggressive Index.

With a standard deviation of 9.26%, ICICI Pru Multi-Asset Fund is prone to slightly higher compared to many of its prominent peers. Nonetheless, the superior performance over the years has helped the fund to fare well in terms of risk-adjusted returns as denoted by its Sharpe Ratio of 0.53, which is currently the best in the category.

[Read: How a Multi-Asset Fund Can Protect Your Portfolio at a Market High]

What is the investment strategy of ICICI Pru Multi Asset Fund?

Classified under Multi-Asset Allocation Funds, ICICI Pru Multi-Asset Fund aims to generate capital appreciation and income by investing across asset classes. The fund usually holds 65-80% of its assets in equities, 10-15% in debt and money market instruments, and the balance in Gold ETFs / Exchange Traded Commodity Derivatives (ETCDs), Silver ETFs, and REITs & InvITs, etc.

For the equity portion, ICICI Pru Multi-Asset Fund adopts the 'bottom-up' approach to identify companies with above-average profitability supported by sustainable competitive advantages and uses a 'top-down' discipline for risk control by ensuring representation of companies from various industries. It also takes exposure to various equity derivatives including futures and options strategies for hedging, portfolio rebalancing, and other purposes.

In the case of debt and money market securities, the fund aims to identify securities that offer an optimal level of yields/returns, considering the risk-reward ratio. The scheme carries out an in-depth credit evaluation of securities to mitigate credit risk. In addition, the fund studies the macro-economic conditions, including the political, economic environment and factors affecting liquidity and interest rates, and positions the portfolio accordingly.

As of March 31, 2024, ICICI Pru Multi-Asset Fund held 66.2% of its assets in equities. The top 10 stocks in the portfolio together constitute around 31.8% of its assets and contains a good mix of various sectors. The top holdings in the portfolio comprise large cap names (including PSUs) such as ICICI Bank, HDFC Bank, NTPC, Maruti Suzuki India, and Reliance Industries, among others. Many of these stocks have been part of the fund's portfolio for well over two years now.

ICICI Pru Multi-Asset Fund has benefitted the most from its holdings in NTPC, Bharti Airtel, ICICI Bank, ONGC, Tata Motors - DVR Ordinary, and Sun Pharma that contributed nearly 30% to its absolute returns in the last 2 years. It also benefitted from TVS Motor Company, SBI, Axis Bank, Hero MotoCorp, L&T, Lupin, and Kalpataru Projects International, among others.

ICICI Pru Multi-Asset Fund's portfolio is currently diversified across a host of cyclical, sensitive, and defensive sectors. Its portfolio is spread across 20+ sectors with the top 10 sectors accounting for 54% of its assets. Banking & Finance stocks form its top holding with an allocation of around 20%, followed by Auto, Power, Petroleum, Infotech, and Pharma, among others.

In terms of debt, the fund invests in low to high-rated corporate debt instruments (current exposure is 5.1%) and sovereign-rated treasury bills and government securities (currently 6.9% of its assets). The average maturity profile of debt instruments is 1 to 2.5 years signifying low interest rate risk. Additionally, the fund held exposure in Gold ETFs, Silver ETFs, REITs & InvITs, etc.

Is ICICI Pru Multi Asset Fund suitable for my investment goals and risk tolerance?

ICICI Pru Multi-Asset Fund has been successful in selecting fundamentally sound undervalued stocks by following a contrarian approach. Since the fund follows a contrarian approach it can witness bouts of underperformance in conditions where growth-oriented funds may be doing well. However, over the long term, it can generate returns that are competitive to its peers and even outpace them.

ICICI Pru Multi-Asset Fund appears to be well placed in terms of its portfolio management strategies. The fund aims to reduce volatility by investing in a well-diversified portfolio of fundamentally sound stocks spread across attractive sectors, with a large-cap bias. If the equity valuations look stretched, the fund has the flexibility to reduce its equity exposure and simultaneously increase exposure to other asset classes such as derivatives, debt, gold, silver, and REITs & InvITs depending on the available opportunities.

ICICI Pru Multi-Asset Fund is suitable for investors looking for a contrarian style Multi-Asset Allocation fund with a long-term view of at least 3-5 years.

Watch this video to find out the 3 best Multi Asset Allocation Funds for 2024:

Note: This write up is for information purpose and does not constitute any kind of investment advice or a recommendation to Buy / Hold / Sell a fund. Returns mentioned herein are in no way a guarantee or promise of future returns. As an investor, you need to pick the right fund to meet your financial goals. If you are not sure about your risk appetite, do consult your investment consultant/advisor. Mutual Fund Investments are subject to market risks, read all scheme related documents carefully. Registration granted by SEBI, Membership of BASL and certification from NISM no way guarantee performance of the intermediary or provide any assurance of returns to investors.

We are on Telegram! Join thousands of like-minded investors and our editors right now.

DIVYA GROVER is the co-editor for FundSelect, the flagship research service of PersonalFN. She is also the co-editor of DebtSelect. Divya is an avid reader which helps her in analysing industry trends and producing insightful articles for PersonalFN’s popular newsletter – Daily Wealth letter, read by over 1.5 lakh subscribers.
Divya joined PersonalFN in 2019 and has since then used stringent quantitative and qualitative parameters to analyse funds to provide honest and unbiased research to investors. She endeavours to enable investors to make an informed investment decision and thereby safeguard their wealth.

Disclaimer: Investment in securities market are subject to market risks, read all the related documents carefully before investing.
This article is for information purposes only and is not meant to influence your investment decisions. It should not be treated as a mutual fund recommendation or advice to make an investment decision in the above-mentioned schemes.

DISCLOSURE AS PER SECURITIES AND EXCHANGE BOARD OF INDIA (RESEARCH ANALYSTS) REGULATIONS, 2014

About the Company including business activity

Quantum Information Services Private Limited (QIS) was incorporated on December 19, 1989.

QIS was promoted by Mr Ajit Dayal with an objective of providing value-based information/views on news related to equity markets, the economy in general, sector analysis, budget review and various personal products and investments options available to the Public. It was the first company to start equity research on an institutional level.

'PersonalFN' is a service brand of QIS and was started in the year 1999. In 1999, the Company registered the Domain name www.personalfn.com for providing information on mutual funds and personal financial planning, financial markets in general, etc. and services related to financial planning and research in various financial instruments including mutual funds, insurance and fixed income products to customers. It offers asset allocation and researched investment recommendations through its financial planning services.

Quantum Information Services Private Limited (QIS) is registered as Investment Adviser under SEBI (Investment Adviser) Regulations, 2013 and having Registration No.: INA000000680. In terms of the second proviso to Regulation 3 (1) of SEBI (Research Analysts) Regulations, 2014 the Company is not required to obtain Certificate of registration from SEBI.

Disciplinary history

There are no outstanding litigations against the Company, its subsidiaries and its Directors.

Terms and condition on which its offer research report

For the terms and condition for research report click here.

Details of associates

• Group Companies including:

  1. Money Simplified Services Private Limited;

  2. PersonalFN Insurance Services India Private Limited;

  3. Equitymaster Agora Research Private Limited;

  4. Common Sense Living Private Limited;

  5. Quantum Advisors Private Limited;

  6. Quantum Asset Management Company Private Limited;

  7. HelpYourNGO.com India Private Limited;

  8. HelpYourNGO Foundation;

  9. Natural Streets for Performing Arts Foundation;

  10. Primary Real Estate Advisors Private Limited;

  11. HYNGO India Private Limited;

• Directors of the Company - Suresh Lulla; I V Subramaniam, Murali Ananthan Krishnan and Rafiq Dossani

1. ‘subject company’ is a scheme on which a buy/sell/hold view or target price is given/changed in this Research Report;

2. Neither QIS, it's Associates, Research Analyst or his/her relative have any financial interest in the subject Company;

3. Neither QIS, it's Associates, Research Analyst or his/her relative have actual/beneficial ownership of one per cent or more securities of the subject Company, at the end of the month immediately preceding the date of publication of the research report;

4. Neither QIS, it's Associates, Research Analyst or his/her relative has any other material conflict of interest at the time of publication of the research report except that QIS (PersonalFN) is, as per SEBI (Mutual Funds) Regulations 1996, an associate / group Company of Quantum Asset Management Company Private Limited and Trustees and Sponsor of Quantum Mutual Fund (QMF) and to that extent there may be conflict of interest while recommending any schemes of QMF. However, any such recommendation or reference made is based on the standard evaluation and selection process, which applies uniformly for all Mutual Fund Schemes. The payment of commission (upfront / annualized & trail), if any, for any Schemes by QMF to QIS (PersonalFN) is also at arm's length and as per prevailing market practices.

1. Neither QIS nor it's Associates have received any compensation from the subject Company in the past twelve months;

2. Neither QIS nor it's Associates have managed or co-managed public offering of securities for the subject Company;

3. Neither QIS nor it's Associates have received any compensation for investment banking or merchant banking or brokerage services from the subject Company;

4. Neither QIS nor it's Associates have received any compensation for products or services other than investment banking or merchant banking or brokerage services from the subject company in the past twelve months.

5. Neither QIS nor it's Associates have received any compensation or other benefits from the subject Company or third party in connection with the research report

1. The Research Analyst has not served as an officer, director or employee of the subject Company.

2. QIS or the Research Analyst has not been engaged in market making activity for the subject Company.

Click here to read PersonalFN's Mutual Fund Rating Methodology

Quantum Information Services Private Limited CIN: U65990MH1989PTC054667 Regd. & Corp. Office: 103, Regent Chambers, 1st Floor, Nariman Point, Mumbai - 400 021

Email:info@personalfn.com Website: www.personalfn.com Tel.: 022 61361200 Fax.: 022 61361222 SEBI-registered Investment Adviser. Registration No. INA000000680, SEBI (Investment Advisers) Regulation, 2013

Investment in securities market are subject to market risks, read all scheme related documents carefully.