Should investors worry about ICICI Pru Value Discovery Fund's underperformance?

ICICI Prudential Value Discovery Fund has a big fan following among mutual fund investors. The multicap scheme is much sought after by investors who subscribe to value investing. However, the scheme’s lacklustre performance lately is starting to worry both investors and advisors. The scheme has been underperforming its benchmark and peers for the last one year. ET.com Mutual Funds spoke to Mrinal Singh, Deputy CIO- Equity, fund manager, ICICI Prudential Value Discovery Fund, to find out why the fund is lagging in the short term.


ICICI Prudential Value Discovery Fund has underperformed its benchmark and peers in the last year? It is lagging its benchmark even in the three-year horizon. What is the reason behind this performance?
We continue to practice true to label value style of investing. While this style generates significant wealth over long term as can be gauged from the fund’s performance from 2009 to 2016, value investing tends to underperform in momentum markets such as the ones in 2006-2007, and 2017. If one refers to the June month-end factsheet for performance, the fund has outperformed its benchmark over three year horizon as well.


Many investors believe that the scheme is struggling because of its very large AUM. Please comment.
Based on its long-term track record/good investment experience, the assets have increased gradually over a period of time. Given that the fund follows a flexi-cap approach, the fund strategy is scalable.

The scheme is mostly invested in large-cap stocks, with a modest exposure to midcap stocks and negligible investments in small-cap stocks. What is the thought behind this investment approach?
The fund focuses on building a high quality portfolio. Historically, a large part of the fund was invested into midcap given its attractive valuation. But in the current situation, large caps offer more value than any other pockets. Hence the scheme is mostly invested in large-cap. At a later stage if the midcaps were to offer value, the fund could have exposure to this segment as well.

What would you like to tell the investors of ICICI Prudential Value Discovery Fund?
Stay invested. The fund offers a unique investment proposition.