ICICI Prudential Value Discovery Fund offers 34% returns in one year. Should you invest?

ICICI Prudential Value Discovery Fund, a favourite of many mutual fund investors and managers, is back with a bang. After offering muted returns for more than two years in a row, the scheme is now back on track. Many value investing fans are rejoiced. The scheme is offering 34% returns in one year, and 6.17% returns in three months. The fund has regained the number one spot on the return chart in 2022 (YTD).

The performance of the scheme had taken a serious hit in 2019. Before that the scheme went on and off the grid from 2017-2019. The scheme returns were down 31% in the period from 22 March 2019 - 23 March 2020. However, the scheme has turned around since April 2020 as value investing was back in fashion in the uncertain market.

“Our overweight stance in sectors like auto, telecom and pharma along with select holdings in metals and oil & gas aided in the strong performance of the fund. Furthermore, we believe adherence to a stable, time- tested investment process and framework as a team helped the fund in delivering a positive investment experience,” says S Naren, CIO, ICICI Prudential Mutual Fund.


Many mutual fund investors were anxious about the fund’s underperformance till last year. Some investors kept asking in various mutual fund forums whether they should stop investing in the fund. “I am of the view that if customers are taught what value investing stands for, then they will be patient investors. This is because in the long run, value investing works. No one left Warren Buffet or Seth Klarman because of the bad investment years they had,” says Naren.

Mutual fund advisors maintain that value investing is for investors who understand its principles. There could be long periods of underperformance followed by great outperformance. If you can’t stomach the volatility, you might make the wrong decision of selling your investment in loss.

Returns	6-month	1-year	3-year	5-year
ICICI Pru Value Discovery Fund	6.15	34.32	22.43	15.58
S&P BSE 100 TRI	0.60	22.02	17.02	15.24
Value category	1.07	25.79	18.21	13.83

“The fund did underperform for quite some time before the market correction due to Covid-19. The market correction at the beginning of 2020 impacted the valuation of most of the stocks and this worked as a good opportunity for value-oriented funds. It is from this stage that the performance of the fund regained its pace and again started delivering returns for its investors. Value funds can go through a period of underperformance when compared to Growth Funds as the way both these funds are managed is different. Value funds may underperform growth funds in overvalued market conditions. They can also help in lesser capital erosion during a market correction. From an investment perspective, you may have an allocation of 15-20% in value funds if you wish to diversify across styles of fund management,” says Harshad Chetanwala, Founder, My Wealth Growth, a wealth management firm based in Mumbai.