Sectors under stress attract us: ICICI Pru's senior fund manager

Mittul Kalawadia, Senior Fund Manager at ICICI Prudential AMC, co-manages the equity portion of its flagship offering, ICICI Pru Equity & Debt Fund, an aggressive hybrid fund that has delivered consistent returns to its investors. The last two years have been especially good, touching new highs. Given the fund's outperformance, we contacted Mr Kalawadia to understand the reasons behind the recent feat, his views on the new-age stocks and the fund house's stock-picking framework. ICICI Pru Equity & Debt Fund has been a consistent performer despite having a high TER over the years. Interestingly, its performance has been so exceptional over the past two years that it is in a league of its own. What has contributed to its outperformance? Firstly, the fund is managed dynamically on both the equity and debt front. Taking the right calls in terms of allocating to equity and debt has been a major contributor. Secondly, being systematic in increasing and decreasing our mid- and small-cap allocations at different points of time has aided the fund performance. Post the NBFC crisis, small and midcap space became volatile and the fund slowly and steadily increased our mid- and small-cap allocations as the valuations were very attractive. So, from 2018-20, we steadily increased our allocation to mid and small-caps but between March-21 and September-21, the allocation has steadily reduced. This approach helped us create alpha when the markets rallied post COVID. Thirdly, portfolio construction with a counter-cyclical/contrarian and bottom-up approach based on picking names which were future market share gainers and staying invested with patience aided portfolio performance. For example, from 2018-20, we were overweight metals, power, telecom and oil and gas, and were underweight banks. These calls were based on each sector's cycles and valuations. This along with mid and small-cap allocation helped us create alpha over the next three years. Thereafter, cutting down on allocation to mid and small caps in 2021 rally further aided portfolio performance as this space went through a lull. As a result of the trimming, the alpha cre

This article was originally published on October 25, 2023.