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Timely sector calls continue to drive alpha in this champion fundAnish Tawakley, ICICI Prudential MF, Mumbai

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ICICI Pru’s Business Cycles Fund continues to perform strongly, delivering a 36% 1 yr return with an 8% alpha over BSE500TRI. Anish’s nimble sectoral calls – in line with the fund’s theme - have been helping the fund sustain its outperformance.

His call to reduce exposure from banks in favour of insurers and asset managers has paid off, as has his continued bullishness on capital goods, cement and autos.

While he acknowledges that valuations are no longer cheap in any part of the market, strong earnings momentum in several domestic cyclicals will likely sustain their stock prices despite valuations.

Reduction in cash position from a high of 19% a year ago to about 5% now indicates his optimism on earnings growth across several sectors, although valuations are higher now than a year ago.

A key recent inclusion in this fund is a 4% position in a China ETF. Anish does not believe in the “China is imploding” narrative – he sees real estate as an isolated sore spot even as the rest of the economy continues to recover. High pessimism, beaten down prices and reasonable medium term prospects are what he looks for in his contrarian buys – and China fits the bill on all 3 right now.

Contrarian thinking and often being one of the earliest to spot turnarounds have been key drivers for the fund house – which gets best expressed in a fund like the Business Cycles Fund – which is best designed to capitalize on such a style.  

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