ICICI Pru MAF has delivered a robust 21% CAGR over the last21 years, comfortably outpacing the markets with lower volatility. It continues its winning ways, holding No.1 position among MAFs over 3 and 5 yr time frames and No.2 over the last 1 year.
Dynamic asset allocation which has seen net equity range between 55% and 75% coupled with active sector calls with sizeable deviations from benchmark have contributed to alpha, in addition to stock selection within sectors.
The fund has pared its net equity position to 55% from the covid highs of 75%. Ihab sees value in large caps and is therefore focusing more on this segment now. Equity picks are typically considered with a 1 to 3yr perspective rather than a buy and hold one.
Energy is a key overweight sector. Ihab likes power generation and distribution plays – underinvestment over the years coupled with consolidation has created a shortage situation and few players that benefit. Oil and gas – upstream and now downstream too – look attractive after policy changes that have made revenues and profits more predictable.
In financials space, Ihab prefers large banks to NBFCs as they have well established liability franchises upon which they can build high quality asset books. NBFCs are on the other hand beginning to see some stress in their unsecured personal loan books, which can be a drag on profits.
Ihab has turned cautious on capital goods due to high valuations and slowdown in global orders. He prefers manufacturing plays in auto / auto ancillaries and pharma.
The fund has 13% exposure to precious metals (gold and silver) and about 2% to other commodities. Ihab is positive on gold and sees healthy prospects for it as US yields finally make a top and start coming off.
Ihab is of the view that CY2024 should see large cap equity outperforming other equity segments as well as other asset classes. Next in line for him is precious metals, followed by fixed income.