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No.1 across 2 fund categories with 20% alphaLalit Kumar, ICICI Prudential MF, Mumbai

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ICICI Prudential Retirement Fund’s Pure Equity Plan has the unique distinction of standing at the top of the performance table for the last1 year for not just retirement funds but also the much broader set of all flexicap funds, delivering a handsome 20% alpha over flexicap category average.

Lalit’s sharply contrarian thinking has created one of the most differentiated equity fund portfolios in the industry, with the completely unloved and under-owned metals and mining sector currently taking the top sectoral position at 12% of portfolio, followed by cement at 10% and a huge underweight in financials at only 8% of portfolio.

The most critical element of Lalit’s portfolio construction strategy is analysis of sector cycles – earnings, global macro, ownership – he looks at all angles to spot value ahead of market. Unconstrained benchmark agnostic top down approach has been a key source of alpha and Lalit sees it remaining the biggest performance driver going forward.

Metal companies have their cleanest balance sheets in 2 decades, are expanding capacities which will drive volume growth and are reporting rising EBIDTA/ton and rising ROCEs which augurs well for earnings growth.

Improving profitability and a gateway to play the India infra theme as well as India real estate theme make cement a promising sector in Lalit’s view.

Lalit’s keen analysis of sector cycles leads him to believe that the best of the financials cycle is behind and not ahead. He believes margins as well as credit growth have topped out for banks and a truly benchmark agnostic approach has led to a bold decision to dramatically underweight the BFSI space.

Lalit is keenly tracking sectors like chemicals, agrochemicals and consumer durables – all of which have not done well in last couple of years – to determine optimum entry point from a cycle perspective.

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