ICICI Pru BAF – a fund that created a category which has gone on to become one of the most popular solutions in the industry – completes a very distinguished 17 years this month. The industry’s first volatility management solution has an impressive top quartile long term performance track record over the last decade and has delivered double digit returns over last 10years and since inception – by staying true-to-label at all times.
Even as many peer BAFs have recently tweaked their asset allocation models to bring in an element of market momentum as an overlay to valuations, the originator of this category remains steadfast in staying with its counter-cyclical valuations driven model – and is willing to take near term underperformance in up-trending markets like the current phase in order to remain true-to-label as a fund that eliminates bias by going contra to sentiment rather than with sentiment.
Not only does the fund go contra to sentiment-driven asset allocation by remaining objective valuations-driven in its approach, but it also goes contra at another level – by zeroing in on sectors and stocks that may not have sentiment with them but which offer good value as their improving fundamentals haven’t yet caught market fancy.
Its early forays into power, infra, oil&gas, pharma and more recently IT have all yielded good results for the fund.
Rajat believes large caps offer good value even as he expresses caution over valuations in many parts of the small and mid caps spaces.