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Prudential ICICI Growth Plan

This fund holds potential to deliver above average return for its fine stock selection and diversification. Over short time period it is unlikely to top the charts but could prove to be a core long-term growth holding.

Prudential-ICICI Growth Plan seeks capital appreciation. The fund follows a bottom-up approach, with a focus on companies with established business model. As a risk control measure, the fund benchmarks its sector allocation against the Nifty.

The fund started just before the start of 1999 boom in equities. In 1999, its first full year went ballistic -- up 188 percent. But it was soon followed by its worst 1-year decline, from March 2000 to 2001, when it lost 52 percent. Reason – a tech heavy portfolio in boom times. At the peak of the boom, the fund had a 49 percent in tech, the large-caps and momentum as well.

The tech wreck lead to an aggressively paring its technology exposure and gaining diversity. Ever since, its technology stake has been an average 20 percent. Through the tough times for equities in past two years, it has largely followed a buy and hold strategy with its stock selection, while maintaining portfolio diversity consistently. It also showed its ability to spot opportunities ahead of market. Case in point: it maintained a reasonable position in petroleum stocks through 2001 besides other PSU translating into sizable gains in recent times. The buy and hold has paid off well, while quality and diversity has guarded the downside well.

The fund is fully invested today. But through the past two years, it has maintained a sizable cash position – an average 14 percent. This has helped it attain greater stability, besides an opportunity to cash on special situations. In a rising market, large cash can drag down the returns.

After a turbulent market cycle, Prudential ICICI Growth has delivered a reasonable return of 20.37%. The fund holds potential to deliver above average return for its fine stock selection and diversification. Though, over short time period it is unlikely to be on top of the charts. It could prove to be an attractive core long-term growth holding.