Apr 13, 2008

Mutual Fund - ICICI Prudential Dynamic Plan Fund : Analysis

ICICI Prudential Dynamic Plan — Petroleum in top slot

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ICICI Prudential Dynamic Plan is a diversified equity plan that follows the growth investment philosophy to invest in a portfolio of large, mid and small-cap stocks. It has the mandate to move gradually into cash, as the market gets over-valued.

Over the past one year, the fund went into cash as high as 25 per cent in the last April and in the recent portfolio the cash component stands at 15 per cent. The petroleum sector continues to occupy the top slot and in the past six months ending February the fund has increased asset allocation to auto, capital goods, industrial products and ferrous metals.

Pesticides finance and non-ferrous metals were added afresh to the portfolio. The power stocks, which have grown exponentially in the last two quarters, were viewed cautiously and the fund pruned the asset allocation gradually from 7.5 per cent to less than half a per cent in the latest portfolio. Banks, software, pharma, consumer non-durables and cement were pruned.

The petroleum sector has cornered 12.1 per cent of the portfolio and out of that 97 per cent of the assets was invested in Reliance Industries and the rest with the stock of HPCL. With a reduced asset allocation to banking sector, the fund trimmed holdings in the Federal Bank and ICICI Bank. In the finance space, HDFC was added afresh to the portfolio. It appears that the fund viewed the media stocks cautiously on back of a continuous surge in the raw material cost. The holdings in Deccan Chronicle and HT Media were pruned over the quarter. Instead, it stepped up exposure to entertainment stock Zee Entertainment in the past six months.

The weight of the auto sector in the portfolio was enhanced. Bajaj Holdings and Investment was the new entrant while the holdings in Mahindra and Mahindra were reduced. In the auto ancillaries space, the fund accumulated the shares of Apollo Tyres, and instead cut holdings in Sundaram Clayton by more than 50 per cent the past quarter.

The fund has taken a contrarian view in the capital goods space when most funds pruned exposure to the sector, the fund gradually stepped up holdings. The stock of Texmaco and AIA Engineering was held on to without much change while Crompton Greaves holdings were pruned by more than 50 per cent in the past six months. The fund used the recent correction to increase Larsen and Toubro, holdings of which doubled in the last two months.

The fund accumulated TCS and the holdings increased by more than 200 per cent in February. The mid-cap stock Subex Azure was the new addition to the portfolio.