ICICI Prudential Mutual Fund announced that its value discovery fund has seen a substantial investor interest over the years. According to the company, in the value category, the fund has become the largest scheme. It has gained a total asset base of Rs 21,195 crore as of July 2021. The scheme has was launched 17 years ago. It is accounting for nearly 30% of the total asset under management (AUM) in the value category.
“If an investor had invested a lumpsum of Rs 1 lakh on August 16, 2004, when the scheme was introduced, that investment would have been worth Rs 22.13 lakh as of July 31, 2021,” the fund house said. It has shown a compound annual growth rate (CAGR) of 20.03%.
“The global experience has always been that value as a strategy will not work all the time but tends to deliver sizeable returns in the long run,” S Naren, ED and CIO at ICICI Prudential AMC, said. He said that the value was out of favour until September 2020. The case was similar to that in 1988-89 and 2007-2008. The investment that was made in 1999 in the value style performed well. This is because markets at the time focussed mainly on technology stocks. The trend was seen repeating in 2007, when infrastructure was in focus,” he added.
Naren pointed out that at the time when markets are peaking the value investing shows good results. This is because the value focuses on investing in sectors that are out of favour but offer long-term potential.
“Till the time central banks tighten monetary policy, most of the sectors which are cyclical in nature, we believe, present good value,” he added further.
A systematic investment plan (SIP) emerges as the ideal investment route for long-term value investing. A monthly SIP of Rs 10,000 through the route since the inception, amounting to a total investment of Rs 20.4 lakh, would have grown to Rs 1.08 crore as of July 31, 2021, i.e. a CAGR of 17.5%.
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