ICICI Prudential Value Discovery Fund has completed 17 years in existence.
ICICI Prudential Value Discovery Fund has completed 17 years in existence. The scheme witnessed significant investor interest over the years, emerging as one of the largest schemes in the value category, with a total asset under management (AUM) of Rs 21,195 crore (as of 31st July, 2021).
This fund follows a value investment style by investing in a diversified portfolio of stocks that have attractive valuations but are quoting at a discount to their intrinsic value.
The scheme has returned a CAGR of little over 20 percent in 17 years. 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 i.e. a CAGR of 20.03%. In the same time frame, the Nifty 50 TRI (Additional benchmark) delivered a CAGR of 15.91% and the corresponding worth of investment would be Rs. 12.24 lakhs. (As the scheme was launched before the launch of the benchmark index, benchmark index figures since inception or the required period are not available).
In terms of SIP performance, a monthly investment of Rs 10,000 via SIP since the inception, (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%, said ICICI Prudential in the statement.
A similar investment in Nifty 50 would have yielded a CAGR of 13.22% for the same period. The returns are calculated by XIRR approach assuming investment of Rs 10000 on the 1st working day of every month. XIRR helps in calculating return on investments given an initial and final value and a series of cash inflows and outflows with the correct allowance for the time impact of the transactions.
Commenting on the 17 years completion, Nimesh Shah, MD & CEO of ICICI Prudential AMC said in a statement, “We are happy that through our product offering we have been able to contribute to favourable investment outcomes of wealth creation for our investors over a long term.”
S Naren, ED & CIO, ICICI Prudential AMC said the 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. Hence, we believe that 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,” said Naren.