ICICI Pru hybrid offerings stay atop all categories

ICICI Prudential Mutual Fund, one of the top fund houses in the country, is particularly popular for its hybrid offerings. In terms of performance, the fund house has been consistent besides delivering a delightful investment experience over the years.

Figuring in the three most preferred hybrid categories among investors –the multi-asset, aggressive hybrid and balanced advantage - ICICI Prudential's offerings have retained their stature among the top performing large fund houses in 2022.

Talking to BizzBuzz, Pankaj Mathpal, Managing Director of Optima Money Managers, says, "Asset allocation is the key to investment and multi-asset funds offer an opportunity to invest in multiple asset classes like equity, debt, gold, silver and REITs; in some cases though a single scheme. This helps investors sustain growth across different market cycles."

Since Sebi mandates a minimum allocation of at least 10 per cent each in all three asset classes, fund managers have the flexibility to invest the remainder amount in asset classes of their choice, which are apparently based on market conditions, he said.

Categories: Multi-asset

The multi-asset category, as the name suggests, is one in which an investor will get exposure to three or more asset classes through a single fund. The category's total AUM as on December 31, 2022, stands around Rs 23,000 crore. Incidentally, the five largest funds in terms of assets account for nearly 89.63 per cent at Rs 21,691.61 crore.

The ICICI Prudential Multi-Asset scheme over the past year delivered 12 per cent return to top the category's returns chart. Such robust performance can be attributed to the fund's overwhelming stance in asset class like gold while tapering allocation to equity as valuation, turned expensive when markets inched to all-time highs. Each of these calls played out well for the fund. The second best performer, SBI Multi Asset Allocation Fund delivered exactly half with a six per cent return.

Aggressive hybrid

With equity allocation ranging from 65 per cent to 80 per cent, this is one of the most aggressive categories among hybrid offerings. The category has total assets of Rs.1,60,240.23 crorewith the top five schemes accounting for approximately 70.6 per cent of the category AUM.

Here too, ICICI Prudential is leading the category returns chart with six per cent return. This performance can be attributed to their prudent debt allocation to floating rate bonds, which was one of the top debt category gainers as interest rates inched higher all through 2022. The next best performing fund delivered 4.3 per cent return.

Balanced advantage

This is one category which investors have flocked to, in the last three volatile years. The category has an AUM of Rs 1,96,696.68 crore and is the largest among all hybrid offerings. The top five funds command nearly 72 per cent of the total AUM. The redeeming feature of this category is that the fund manager can dynamically allocate to equity and debt. Given that the category is generally looked up by conservative investors, most of the fund houses tend to increase their allocation to equity when valuations turn attractive and vice-versa. To determine the allocation, fund managers rely on market metrics and in-house models while keeping human bias at bay. For the purpose of analysis, we have considered only true-to-label funds.

The best performing fund in the category was ICICI Prudential delivering nearly six per cent return with an average monthly net equity level of just 34.4 per cent. Given the lesser allocation to equities, the fund has been relatively less volatile in terms of performance. The next best performers in the category were SBI Balanced Advantage and Tata Balanced Advantage Fund, delivering four per cent and 3.4 per cent, respectively.

In effect, it can be concluded that the approach of ICICI Prudential when it comes to managing hybrid offerings has worked well for its investors by way of robust returns and lesser volatility.