ICICI Prudential value discovery fund AUM reaches Rs 21,195-cr! 20% CAGR in 17 years

ICICI Prudential Mutual Fund on Friday said its value discovery fund has witnessed significant investor interest over the years and has emerged as the largest scheme in the value category with a total asset base of Rs 21,195 crore as of July 2021.

Moreover, the scheme -- ICICI Prudential Value Discovery Fund -- which completed 17 years in existence accounted for nearly 30 per cent of the total asset under management (AUM) in the value category, the fund house said in a statement.

The fund house said that if an investor had invested a lumpsum of Rs 1 lakh at the time of inception (August 16, 2004), as of July 31, 2021, that investment would have been worth Rs 22.13 lakh, translating into a compound annual growth rate (CAGR) of 20.03 per cent.

In the same time-frame, the Nifty 50 TRI (additional benchmark) has delivered a CAGR of 15.91 per cent and the corresponding worth of investment would be Rs 12.24 lakh.

The scheme follows a value investment style by investing in diversified portfolio of stocks that have attractive valuations but are quoting at a discount to their intrinsic value.

S Naren, ED and CIO at ICICI Prudential AMC, said global experience has always been that value as a strategy will not work all the time but tends to deliver sizeable returns in the long run.

"Until September 2020, value was out of favour which was also the case even during 1988-89 and 2007-2008. In value style, we have seen that investments made in 1999 did very well because at that point in time markets were largely focused on technology stocks. Similar was the case in 2007 when infrastructure was in focus," he added.

According to him, value investing at a time when market are elevated tends to do well as value focuses on investing in sectors which are out of favour but offer long-term potential.

"Even in current times, there are select sectors where valuations are attractive and many of such pockets are yet to deliver returns since 2008. Most of the sectors which are cyclical in nature, we believe, present good value till the time central banks tighten monetary policy.

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With value investing being suited for long-term investing, systematic investment plan (SIP) emerges as the ideal investment pathway. In terms of SIP performance, a monthly investment of Rs 10,000 through the route since the inception, which would amount to a total investment of Rs 20.4 lakh, would have grown to Rs 1.08 crore as of July 31, 2021 i.E. A CAGR of 17.5 per cent.

A similar investment in Nifty 50 would have yielded a CAGR of 13.22 per cent for the same period.