Here, you get a portfolio clearly tilted towards small- and mid-cap stocks and at times, they have consumed over 90 per cent of the portfolio. And with the average market capitalisation of the portfolio slipping below Rs 250 crore at times, nothing seems to be untouchable for this fund.
The argument that an equity linked savings scheme (ELSS) fund manager has at least three years' time to rejig portfolio has no meaning here. The fund manager loves to try out stocks but the buy-and-hold strategy does not seem to be his priority. For instance, around 217 stocks have been included in the portfolio in the last four years, majority of which have been added in less than five months. In fact, 20 per cent of the stocks have come in just a month! The fund changes its portfolio complexion quite often. For example, the fund manager has changed nearly 85 per cent of the portfolio in the last one year. Therefore, invest in this fund only if you are comfortable with such aggressive strategies.
As far as returns are concerned, you will feel happy. Over the years, it has consistently outperformed an average peer. In the three- and five-year period ended May 29, the fund had the second best annualised return of 83.44 per cent and 51.09 per cent, respectively. Last year, it pulled off a top-quartile return of 68.80 per cent. As on May 26 this year, Pru ICICI Tax Plan is ahead of an average peer with a return of 17.89 per cent.
The fund was among the worst hit during the tech meltdown - dipping nearly 35 per cent- almost twice the category average during the June 2000 quarter. However, it has staged a comeback.
In 2002, it started to try out mid- and small-caps seriously and since then has produced exceptional results. In recent times, the portfolio has become highly diversified with as many as 56 stocks in April this year. While this may sound a bit too much of diversification, it may not be a bad idea given the consistent rise in the markets.
Sankaran Naren, who assumed the responsibilities of the fund in October last year, seems to have settled down well and carry on the good work done by his predecessor.