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ICICI Pru Discovery and ICICI Pru Dynamic funds are not for the conservative investor

I wanted to ask about ICICI Prudential Discovery Fund and ICICI Prudential Dynamic Fund. Which one is better? Which one should I invest in? Should I invest in both?

Both these funds are volatile. ICICI Prudential Discovery Fund invests in small- or mid-size companies and when the markets crashed earlier, it too fell in tandem. However, it has ramped up performance now, when the markets are rising. In fact, there has been a 160 per cent growth in this fund in the last six months. The fund has grown, but those who had invested in January, 2008, are still in deficit. Markets will have to rise much more for them to recover all their losses. So, one should look at this fund in that manner. It will do good if the markets are good and vice versa.

ICICI Prudential Dynamic Fund is a similar entity as well. If there is a need to choose between these two funds specifically, for a conservative investor, both do not fit the bill.

I am investing in Reliance Vision, SBI Magnum Tax Gain and HDFC Top 200. I had increased exposure in these funds when markets registered a sharp fall in 2007. I made a profit on that. What I want to know is, if a fund manager of a particular Asset Management Company (AMC) resigns, then how much does it impact the funds he has been handling? Or, does the management have a set of rules that specify the amount of exposure in a particular sector. Should we track the fund manager in that case? How do we go about it?

A fund manager is a very important person and if the fund is doing good and the manager has been managing that particular fund for a long time, then his going might hamper future performance. The human element, despite umpteen specified norms, is very important. A fund manager’s role becomes even more important if he/she is managing equity funds. If the manager has been at the helm of a fund for a long time, then it a cause for worry. Therefore, one should be vigilant when a manager leaves a fund.
If it is a fixed income fund, the manager has a role to play, but it is very limited.

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