Icici Prudential Bluechip Fund: Is It Worth Your Investment?

The ICICI Prudential Bluechip Fund is a Large Cap mutual fund scheme that seeks to generate long-term capital appreciation and income distribution to investors. The fund predominantly invests in equity and equity-related securities of large-cap companies. It has been in existence for over 11 years, delivering average annual returns of 16.7% since its inception. With a history of generating consistent returns and protecting against volatility, the fund has an ET Money Rank of #1 of 25 and a consistency rating of 4.5, making it a good addition to an investment portfolio. However, investors should be prepared for potential ups and downs in investment value and should only invest if they can remain invested for at least 3-4 years.

How does the ICICI Prudential Bluechip Fund compare to other funds?

The ICICI Prudential Bluechip Fund is a large-cap mutual fund scheme that seeks to generate long-term capital appreciation and income distribution to investors from a portfolio predominantly invested in equity and equity-related securities of large-cap companies. The fund has been in existence for over 11 years and has delivered average annual returns of 16.7% since its inception. With an expense ratio of 0.86%, the fund's returns are currently better than the category average.

When compared to other funds in its category, the ICICI Prudential Bluechip Fund has underperformed at beating the benchmark, with a lower alpha value. It also has poor risk-adjusted returns, as indicated by its Sharpe ratio. However, the fund is less sensitive to market ups and downs, as indicated by its beta value of 0.88. The fund also has a more volatile performance, with a standard deviation of 11.3.

In terms of asset allocation, the ICICI Prudential Bluechip Fund has invested the majority of its money in the Financial, Energy, Automobile, Technology, and Construction sectors. Its top holdings include ICICI Bank Ltd., Larsen & Toubro Ltd., HDFC Bank Ltd., and Reliance Industries Ltd. The fund's portfolio is considered largely conservative, with most of its holdings in Large Cap stocks and debt instruments.

Overall, the ICICI Prudential Bluechip Fund is a conservative investment option suited for investors seeking long-term capital appreciation with a focus on large-cap companies. While it may offer consistent returns, it is important to note that its performance compared to other funds in its category is mixed, with some aspects outperforming and others underperforming.

What are the historical returns of the fund?

The ICICI Prudential Bluechip Fund has demonstrated strong historical returns, with an impressive track record of generating consistent returns in its category. Here is a detailed breakdown of its performance over the years:

Historical Returns Overview:

As of October 2024, the ICICI Prudential Bluechip Fund has delivered a trailing return of 36.68% over the past year, 20.54% over three years, 21.1% over five years, and an impressive 16.7% annualised return since its inception in January 2013. This equates to a total investment of ₹12 lakh resulting in a corpus of ₹1 lakh and an absolute return of 52.69%.

Comparison to Category Average:

The fund's performance has been superior to the category average over various time periods. While the fund returned 36.68% in the last year, the category average stood at 37.13%. Over three years, the fund's 20.54% return outperformed the category's 17.7% return. However, in the last five years, the fund's 21.1% return was slightly lower than the category's 21.32%.

Risk-Adjusted Returns:

The fund has also demonstrated better risk-adjusted returns compared to its peers. With a Sharpe ratio of 1.23 vs. 5.57 and a Treynor ratio of 11.3 vs. 10.4, the fund has effectively generated higher returns for the amount of risk taken.

Return Consistency and Volatility Protection:

The ICICI Prudential Bluechip Fund excels in delivering consistency in returns and protection against volatility. It has achieved a return consistency rating of 4.5 and is ranked #1 out of 25 funds in its category by ET Money. This indicates a solid track record of generating solid returns with exceptional consistency.

In summary, the ICICI Prudential Bluechip Fund has delivered strong historical returns, outperforming its category average in most periods and demonstrating superior risk-adjusted performance. Its consistency in returns and protection against volatility make it a compelling investment option.

What are the fees associated with investing in the fund?

When considering investing in the ICICI Prudential Bluechip Fund, it is important to understand the fees associated with it. Here is a detailed overview of the fees you may encounter:

Expense Ratio

The ICICI Prudential Bluechip Fund has an expense ratio that varies depending on the specific plan and source. The expense ratio for the direct plan is 0.86%, while the regular plan has a higher expense ratio of 1.59%. This fee is expressed as a percentage of the fund's assets and covers the costs of managing your investments, including administrative, management, and advertising expenses.

Exit Load

The fund also charges an exit load of 1% if you redeem your investment within one year. This means that if you decide to withdraw your investment before completing a year, you will be charged a fee of 1% of the redeemed amount.

Capital Gains Tax

When investing in the ICICI Prudential Bluechip Fund, you may also be subject to capital gains tax depending on your holding period. If you sell your investment after one year, long-term capital gains tax will apply. The current tax rate for long-term capital gains exceeding Rs 1.25 lakh in a financial year is 12.5%. On the other hand, if you sell your investment before completing one year, short-term capital gains tax will be applicable at a rate of 20%.

Broker/Distributor Commission

It is important to note that the regular and direct options of the fund have different expense ratios due to the commission paid to the broker or distributor. Regular funds have a higher expense ratio because they include the commission paid to the intermediary, while direct funds have a lower expense ratio as there is no intermediary involved.

Other Potential Fees

In addition to the fees mentioned above, there may be other charges associated with investing in mutual funds, such as transaction fees, account maintenance fees, or platform fees, depending on how and where you purchase the fund. These fees may vary depending on the platform or intermediary you use to invest in the ICICI Prudential Bluechip Fund.

What are the potential risks of investing in the fund?

The ICICI Prudential Bluechip Fund is an equity mutual fund scheme that predominantly invests in large-cap companies' equity and equity-related securities. The fund has been in existence for over 11 years and has generated average annual returns of 16.7% since its inception. While the fund has consistently delivered solid returns, potential investors should be aware of the following risks associated with investing in this fund:

• Market Risk: As with any mutual fund investment, there is a risk of losing money due to market fluctuations. Past performance does not guarantee future results, and the value of investments can go down as well as up.
• Equity Risk: The fund primarily invests in equity and equity-related securities, which are generally considered riskier than other types of investments, such as fixed-income options. The value of equity investments can be more volatile and subject to greater short-term risks.
• Large-Cap Company Risk: While large-cap companies are generally considered more stable than smaller companies, they can still experience fluctuations in stock prices. Investing in a fund that focuses on large-cap companies does not guarantee protection from market downturns.
• Sector Risk: The fund's performance may be influenced by the performance of specific sectors in which it invests. For example, the fund has significant investments in the financial, energy, automobile, technology, and construction sectors. Negative developments or downturns in these sectors could impact the fund's performance.
• Geographic Risk: The fund primarily invests in Indian companies, so its performance may be closely tied to the Indian economy and market conditions. Diversification across different geographic regions is limited.
• Liquidity Risk: There is no assurance of the fund's liquidity. Investors may experience difficulty in redeeming their investments or may have to pay exit loads if they redeem their investments before a certain period, typically one year.
• Fund Management Risk: The fund's performance depends on the expertise and decision-making of its fund managers. Poor management or incorrect assessments of market conditions could lead to underperformance or losses.
• Concentration Risk: The fund's top holdings are concentrated in a few large-cap companies. A decline in the performance of these companies or sectors in which they operate could significantly impact the fund's overall performance.
• Interest Rate Risk: Changes in interest rates can affect the value of the fund's investments. Rising interest rates can cause a decline in stock prices, while falling interest rates can make fixed-income investments less attractive, impacting the fund's returns.
• Credit Risk: The fund has some exposure to debt instruments, which carry the risk of default or failure to make payments by the issuer. Changes in the creditworthiness of the issuers can impact the fund's performance.

It is important for investors to carefully consider their risk tolerance, investment objectives, and time horizon before investing in the ICICI Prudential Bluechip Fund. Diversification across different asset classes, sectors, and geographic regions can help mitigate some of these risks.

How does the fund's portfolio breakdown?

The ICICI Prudential Bluechip Fund seeks to generate long-term capital appreciation and income distribution to investors from a portfolio that is predominantly invested in equity and equity-related securities of large-cap companies. The fund's portfolio breakdown is as follows:

As of 31 July 2023, the fund had invested 92.46% in equity, 6.92% in cash and cash equivalents, and 0.63% in debt. The fund is mandated to invest at least 80% of its assets in large-cap stocks at all times.

The fund's top holdings include ICICI Bank Ltd., Larsen & Toubro Ltd., HDFC Bank Ltd., Infosys Ltd., and Reliance Industries Ltd. The fund has the majority of its money invested in the Financial, Energy, Automobile, Technology, and Construction sectors.

The fund has a Very High-risk rating according to SEBI's Riskometer.

Frequently asked questions