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Exploiting Valuations

ICICI Prudential Discovery fund exploits the valuation gap & is a good fund to invest in for the long-term…

I plan to start an SIP for Rs 10,000 every month in ICICI Prudential Discovery Fund. Please advise if this is a suitable fund?- Viren Dedhia

ICICI Prudential Discovery is a four star rated mid- and small cap fund which earned an annualized 21.23 per cent in the past three years and 15.25 in the past five years. The fund, through its process of discovery, seeks to identify stocks whose prices are low relative to their historic levels, book values, earnings and cash flow potential. It exploits valuation gap and tries to unlock value over the long term by focusing on selecting stocks which can be risky; but as the stocks are bought at a discount to their fair value, there is a margin of safety in the value portfolio. It is a good fund to invest in provided you regularly keep track of its performance.

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