Scheme Rating
IME Scheme Rating
Can be considered for investment: ICICI Pru Contra follows a contra-oriented style of investing. While ICICI Pru PMS suffers from common MF-founded PMS concerns (churn in the investment team, lack of a tightly defined investment strategy), we take into cognisanse it’s strong & consistent performance since inception & the presence of Anand Shah (a senior investment professional). While not our top-rated contra-investing scheme (contra investing in particular can be difficult in a larger AMC), ICICI Pru PMS Contra can be considered for investments.
IME Strategy Rating
Strategy Definition not as tight as our preferences: A well-executed contra approach to investing can deliver substantial outperformance when executed well. But contra is often a difficult strategy to implement in practice, since it involves going against popular perceptions, and requires a fund manager with a very high level of conviction to pull off. We do not see this being implemented in this strategy (which has several in-favour stocks as part of the portfolio). There also appears to be confusion between the stated objectives of ‘a focused portfolio’ and ‘optimal diversification’.
PMS Scheme Ratings are driven by IME’s Proprietary Scheme Rating Methodology, which takes into account our ratings of the Scheme’s investment strategy, its maturity, the investment team, and our separate rating on the AMC that runs this particular scheme. Our views on each of these individual criteria are available via the IME RMS – which you can view by reaching out to one of our relationship managers (using either the live chat or book appointment feature on this site).
IME View on ICICI Pru Contra
ICICI Contra Portfolio- Investment Strategy
ICICI Pru PMS Contra Strategy follows a contrarian investment style (investing in underperforming and out-of-favour stocks & sectors). The strategy is market-cap agnostic and aims to have a focused portfolio with an optimal level of diversification.
Investment Strategy
Contra Portfolio follows contrarian investment style which is driven by:
- Out of the flavour: Investing in companies where prevailing sentiments not positive
- Focus: Widespread pessimism about company can drive price low. Prices tend to overstate the risk and understate the prospects of recovery.
- Avoid: Widespread optimism leads to high valuation that may in turn lead to correction when valuations are not justified by fundamentals.
- Herd Behaviour: Observe the herd behaviour as prices of stocks are pushed by investors to unsustainable level in both direction. Over reaction by market participants lead to underperformer become under valued and outperformer become over valued.
- Market Efficiency: Also observe the market efficiency as investor behaviour causes market to deviate from fundamental values creating inefficient markets.
Investment Process
- Identification: Identifying sectors or companies facing temporary headwinds.
- Selection Criteria: Selection based on ROE, ROCE, Market Cap by cash profit, P/E, Corporate Governance and capital allocation track record.
- Portfolio Construction: The portfolio is constructed by choosing sectors/companies which are facing temporary stress and are expected to survive in long.
Investment Framework
They utilise a 3 filter framework in order to search for companies with meaningful and sustainable earnings growth
- Business
- Management
- Valuation
Business Economics:
- Growth defined by Company growing faster than industry, industry faster than market, that are also looking for Structural and long-term sustenance and are simple to understand and in a focused segment.
- Moats defined by Brand Franchise, Industry Structure, Technology/Patents, Cost Advantage, License area, Distribution, etc
Management and Governance
- Competence driven by Sales(Faster than sector); Margin(Improving); Capital(Smarter)
- Governance based on Interests(Aligned with shareholders); and having credible Track Record
Valuation
- Cash- Cash flow being the centre of investment Process (Intrinsic value, DCF, Dividend Yield, Op. Cash Yield, etc)
- Evaluate Margin of Safety- Identifying a greater margin of safety based on weaker moat for a better risk-reward profile.
Trailing Performance
1yr | 3yr | 5yr | Since Inception | |
---|---|---|---|---|
ICICI Pru Contra | 45.8 | 26.4 | 28.6 | 23.9 |
S&P BSE 500 TRI | 41.1 | 18.4 | 22.4 | 17.8 |
Alpha over Broad Mkt BM | 4.7 | 8 | 6.2 | 6.1 |
Performance as of: 30-Sep-24 | Inception Date: 14-Sep-18
Fund Managers
Anand Shah | 4-star rated FM
Fund Manager | 24 yrs Experience | 4 yrs at current firm
Past Experience: VP investments (Kotak MF), Co-Head Equities (ICICI Pru AMC), Head Equities (Canara Robeco AMC), Dy CEO & Head of Investments (BNP Paribas Asset Management), CEO (NJ Asset Management)
Chockalingam Narayanan | 3-star rated FM
Fund Manager
Past Experience: Fund Manager (BNP Paribas), Deutche Equities, Batlivala & Karani Securities
Narayanan has 15+ years of experience in fund management, and investment research. Prior to joining ICICI Pru AMC, he was at BNP Paribas, Deutche Equities and Batlivala & Karani Securities. He has a PGDM from TA Pai Management Institute, Manipal. He also passed the FRM certification by Global Association of Risk Professionals, USA.
Fee Structure
Fee Structure | Fee |
---|---|
Fixed Fee Structure | 2.5 |
Variable Fee Structures | 1.5% fixed + 15% above 10% hurdle |
Exit Fees | 1yr (1%) |
AMC
AMC: ICICI Pru PMS (click link for detailed AMC review)
Not a top recommendation due to being an MF-driven PMS: ICICI Pru PMS suffers from the common ailments of large MF-driven PMS houses (PMS as an add-on instead of a segregated business unit, churn in the investment team, a lack of skin in the game for the CIO and typically loosely defined investment philosophies). While the distribution strengths of the AMC can help the PMS scale and there are benefits of research access, most MF driven PMSs cannot compare to strong CIO-cum-founder driven PMS houses.
AMC Rating
AMC Pedigree
AMC Size
Team Pedigree
Inv Philosophy
Performance
Free 30-Day Trial of the IME RMS
Details shared above, are only a short-snapshot of the more detailed analysis that resides in IME’s Proprietary RMS (Research Management Solution).
The IME RMS is the first tool ever, to give investors direct access to the insights of the central research team. Investors gain direct access to our ratings, rating rationales & analysis across thousands of funds (MFs, PMSs, AIFs, Global funds), asset classes, categories & more.
Note: PMS AMC & Scheme Reviews and Ratings are based on IME Capital’s Proprietary Review and Rating Methodology (read more here: AMC Rating & Scheme Ratings). These reflect the unbiased views of our central research team, based on our assessment of the investment value of these PMS/AIF strategies for our investors. We follow a highly stringent rating-criteria, where approximately 50% of PMS AMC’s & strategies would be rated 2-star or below (this is not meant to indicate that these funds are not investment-worthy, but that they do not currently fulfill the requirements we focus on for recommending funds to our investors — based on our internal views on the merit of the AMC/strategy relative to peers). Reviews & Ratings are primarily based on research of publicly available information (SEBI disclosures, PMS websites, PMS-aggregation platforms, webinar recording, media interviews etc.) and no explicit consent is required from AMCs for the same. While we endeavour to do further due-diligence via direct interactions with the investment teams of AMCs, this is typically restricted to AMC’s that meet our foundational fund selection criteria (reviews on lower-rated AMCs are often based solely on publicly available information). The views reflected in our Reviews & Ratings, are our independent views and may not be shared by the AMC’s and the investment teams. Please read detailed disclaimer for more.