Fund of Fortnight

Fund of Fortnight

ICICI Prudential Smallcap Fund - Direct Plan (Growth)

Reason for recommendation

Many of you might be surprised to see a small-cap dedicated fund in our recommendation list in the current environment as small-cap category remains the worst performer in the recent times. Moreover, there is no certainty that the fall is going to stop soon. Nevertheless, we believe that after a fall of more than 25 per cent in the last one year, it is somewhere near the bottom. Hence, it is right time to cherry pick funds from the small-cap category. ICICI Prudential Small-Cap fund is one such fund that you can look to start your monthly SIP. The fund has been able to beat its benchmark and peers in most of the time frames. 

In the last one month, the fund has fallen lower than the category and its benchmark, this despite having larger exposure to the small-cap stocks in its portfolio compared to its peers and the benchmark. What has helped the fund to outperform in its last few months are the better performance by State Bank of India, where it holds 8.41 per cent of the total asset under management. Besides, the fund does not hold any of the non-banking financial companies (NBFC) that are currently witnessing nasty falls. In terms of sector allocation, the fund is well-diversified with top sector ‘Services’ holding 18.54 per cent, followed by ‘Construction’ that hold 16.5 per cent. Rest all other sectors do not have more than 7 per cent of the total portfolio. Going ahead, presence of stocks such as State Bank of India, PNC Infratech and Ipca Lab is going to generate returns for the fund and its investor. Hence, this fund is suitable to investors who have a stomach for volatility in the short period. However, it is definitely going to generate better returns.