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In Top Gear

Pru ICICI Discovery has started off extremely well. In 2005, it pulled off a trop quartile performance. Low PE and a highly diversified portfolio is a plus here

Launched in July 2004, the fund gained a massive 82.86 per cent in little over four months of its life in 2004, as against an average peer's 62.91 per cent return during the same period. Such was the speed of gain that only six--all experienced funds--fund could move ahead of it during the period.

The exceptional performance did not end there. The fund repeated the feat in 2005 as well and raced to give a top-quartile return of 63.74 per cent as against an average peer's 46.67 per cent gain.

In five quarters of existence, the fund has outperformed an average peer four times. It started 2005 with a bang. While an average diversified equity fund barely gained anything in the first quarter (up a marginal 0.96 per cent), this fund added 3.49 per cent.

It maintained lead over others in the next two quarters before falling marginally short of an average peer in the last quarter. However, by that time it was clear that investors were enjoying the performance of this hot newcomer-starting with an asset base of just Rs 130 crore at August 2004 end, the fund now manages over Rs 1,030 crore.

The fund has stuck to its objective of picking value stocks-at 15.96, its PE is among the least in the category. The fund has also benefited from a portfolio dominated by mid- and small-cap stocks--exposure to them have been around 50 per cent on most occasions.

Among sectors, the portfolio keeps on shifting regularly. Currently, the fund seems bullish on automobile stocks.

The fund prefers to keep a large number of stocks as a risk control measure. And the number of stocks has increased as the markets touched new high.