The largest value fund in India by assets under management (AUM), ICICI Prudential Value Discovery Fund, has successfully completed 19 years. The Scheme has an AUM of Rs 32,659.44 crore which accounts for nearly 30 per cent of the total AUM in the value category. This indicates significant investor trust of value investors in the scheme. Data as of July 31, 2023. (Source: Value Research).
The scheme follows a value investment style by investing in diversified portfolio of stocks that have attractive valuations but are quoting at a discount to their intrinsic value.
A lump sum investment of Rs 10 lakh at the time of inception (August 16, 2004), as of July 31, 2023, would be worth approximately Rs 3.1 crore i.e. a CAGR of 20 per cent. A similar investment in Nifty 50 would have yielded a CAGR of 15.6 per cent at approximately Rs. 1.5 crore.
Speaking on the occasion of 19 years’ completion, Nimesh Shah, MD & CEO of ICICI Prudential AMC, says, “The greatest of the investing gurus be it Warren Buffett, Seth Klarman, Joel Greenblatt etc. are all proponents of value investing as the way to build long term wealth. We at ICICI Prudential AMC Ltd believe value as an investment style is here to stay as investors are increasingly becoming aware of what constitutes value and why it must be followed diligently. But the caveat here is that value can test one’s patience at times. We may have to wait for a long time for value to deliver on its promise. Through the journey of ICICI Prudential Value Discovery Fund, we have endeavoured to prove that value as a style works well in India as well. We are happy to note that the Scheme over the years has helped patient investors create long-term wealth.
“Globally as well as in the scheme, there have been patches of time when value investing has not done well. However, if an investor is ready to be patient, then value investing will deliver sizeable returns over the long term. This is because the thesis of value investing is about buying stocks that have attractive valuations but are quoting at a discount to their intrinsic value,” says S. Naren, ED & CIO, ICICI Prudential AMC Ltd.
He further adds, “Given the approach, it is advisable that investors should consider investing through the SIP route for the long term, especially during times when the past return is very good. On the other hand, when the past returns are low, we recommend investors to consider lump sum investing.”
With value investing being suited for long-term investing, SIP emerges as a good investment pathway. In terms of SIP performance, a monthly investment of Rs 10,000 via SIP since the inception, which would amount to a total investment of Rs 22.8 lakh, would have grown to Rs 1.59 crore as of July 31, 2023 i.e. a CAGR of 17.87 per cent. A similar investment in Nifty 50 TRI would have yielded a CAGR of 13.22 per cent. Data as on July 31, 2023.
The returns are calculated by XIRR approach assuming investment of Rs 10,000 on the first working day of every month. XIRR helps in calculating return on investments given an initial and final value and a series of cash inflows and outflows with the correct allowance for the time impact of the transactions. Past performance may or may not be sustained in future.
*Inception date is Aug 16, 2004.
**Scheme benchmark is Nifty 500 TRI.
The performance of the scheme is benchmarked to the Total Return variant of the Index. The investment value shown above would have varied based on the amount of SIP, the investment period of the investors and continuity of SIP. The returns shown are not indicating/assuring in any manner and is not an indicator of future returns. ICICI Prudential Mutual Fund does not provide guaranteed returns. Past performance may or may not sustain in the future.
DISCLAIMER: The views expressed are those of the author and do not purport to reflect the opinions or views of THE WEEK. The content is for information purposes only and should not be considered an impartial opinion, medical, legal, or financial advice.
