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Moving Fast

This fund has made the most of the changing fortunes of the FMCG sector. With a mid-caps loaded portfolio, the fund has raced to deliver over 78 per cent returns in the last two years

Pru ICICI FMCG flourished under the erstwhile fund manager Krishna Kumar. When he assumed responsibility in June 2004, the fund was down nearly 14 per cent in the first six months, as winds were against FMCG stocks. However, his appointment coincided with the change in fortune for the sector. In the next six months, the fund sprinted to deliver 50 per cent and emerged as the hottest FMCG fund. This was just the beginning of the good times. In 2005 as well, the fund earned 94.26 per cent to earn the top place. Unfortunately, he no longer manages the fund.

In his tenure, fund manager Krishna Kumar scripted a phenomenal growth story for this fund. A few key alterations have set the course for this fund. To start with, in June 2004, Krishna Kumar set the fund's style in order. Till then, the portfolio was a mixture of large- mid- and small-cap stocks. The fund manager took a bold step and started to shift assets towards mid-cap stocks-from 20.49 per cent in June 2004, the share of large-cap stocks has come down to around 18 per cent. He also cut exposure to illiquid small-cap stocks substantially.

However, high returns have come at a cost-fund's volatility has increased substantially in the past. Currently, it's the most volatile fund among the three FMCG funds.

The fund also has a consistent performance record. Like the other two FMCG funds, Pru ICICI FMCG too started off during one of the most testing times for the sector. It posted negative returns in 2000 and 2001, but lost less than peers. 2002 was a nightmare for the fund. It dipped 10.13 per cent, much more than the category average loss of 4.37 per cent. The only face saver for the fund was that it managed to beat the 11.65 per cent loss of BSE FMCG index. Since then though, it has staged a commendable recovery. It took advantage of the mid-cap rally of 2003 to reward investors with a return of 59 per cent.