Performance Analysis

Of
ICICI Prudential Focused
Bluechip Equity Fund
SAPM B
Group 1
Bhuvnesh Garg 1301-331
Divya Arora 1301-337
Harshit Singhal 1301-343
Kapil Goyal 1301-354
Kritika Sharma 1301-357
Nalini Chandrika Rayudu 1301-369
Rohit Tolani 1301-398
2
Agenda

About ICICI Prudential Focused Bluechip Equity Fund
Portfolio Attribution Analysis
Performance Analysis
Holding Period Analysis
3
Net Assets : Rs. 5884.5 crore as on 30
th
June, 2014
NAV : Rs. 26.36 as on 22
nd
Aug, 2014
Fund Profile
To invest in 20 large cap companies from
the top 200 stocks listed on the NSE on the
basis of market capitalization
About
Key Features Sector Allocation (as of 31
st
March 2014)
Investment Strategy Investment Focus
To create reasonable diversification across sectors capitalization
Long term focus with "buy and hold" approach
Long term wealth creation solution
Launched : May 2008
Fund Manager : Mr. Manish Gunwani (since Jan 2012)
Type : Open Ended
Minimum Investment (Rs.) : 5000
Minimum SIP Investment (Rs.) : 1000
In case, the total assets under
management crosses Rs.1000 crore, then
more than top 20 large companies would
be added to the portfolio.
Exit Load : 1% for redemption within 365 days
Financials
27%
Information
Technology
15%
Energy
13% Consumer
Discretionary
12%
Consumer
Staples
9%
Materials
7%
Health Care
7%
Industrials
5%
Utilities
3%
Telecommunic
ation Services
2%
Funds
0%
4
Agenda

About ICICI Prudential Focused Bluechip Equity Fund
Portfolio Attribution Analysis
Performance Analysis
Holding Period Analysis
5
Portfolio ICICI Prudential Focused Bluechip Equity Fund ; Benchmark CNX 100
Portfolio Classification
Portfolio
Weights
Benchmark
Weights
Portfolio Return
Benchmark
Return
Pure Sector
Allocation
Effect
Within Sector
Allocation
Effect
Interaction
Effect
Financials 27.28% 27.50% 18.63% 10.14% 0.02% 2.33% -0.02%
Energy 12.60% 10.54% 15.09% 13.32% -0.15% 0.19% 0.04%
Information Technology 14.65% 14.41% 34.07% 32.30% 0.03% 0.25% 0.00%
Industrials 5.18% 6.61% 24.90% 35.86% -0.22% -0.72% 0.16%
Consumer Discretionary 11.55% 9.37% 61.46% 35.20% 0.32% 2.46% 0.57%
Consumer Staples 9.24% 11.68% 17.70% 18.30% 0.06% -0.07% 0.01%
Materials 6.92% 8.12% 11.23% 20.44% 0.00% -0.75% 0.11%
Health Care 6.78% 6.02% 36.95% 30.37% 0.07% 0.40% 0.05%
Utilities 3.16% 3.28% 3.37% -2.27% 0.03% 0.19% -0.01%
Telecommunication Services 2.43% 2.48% 8.57% 26.42% 0.00% -0.44% 0.01%
Funds 0.21% 0.00% 34.51% 0.00% -0.04% 0.00% 0.07%
Total Returns 100.00% 100.01% 25.67% 20.72% 0.11% 3.83% 1.00%
Difference between portfolio
and benchmark return
4.95%
Portfolio Attribution Analysis
The allocation effect measures fund managers ability to effectively allocate their assets to various segments
The total return for the portfolio is 4.95% higher than the benchmark index return
The pure allocation effect for the fund is positive, i.e. , 0.11% which initially describes the better performance of the fund manager in
allocating the weights to the sectors, however 5 out of 10 sectors had negative/ zero pure sector allocation effect. It was only due to
efficient allocation in the Consumer Discretionary Sector, the negative effects were weighed out and the pure sector allocation effect
was positive.
Analysis
6
Agenda

About ICICI Prudential Focused Bluechip Equity Fund
Portfolio Attribution Analysis
Performance Analysis
Holding Period Analysis
7
Performance Analysis
Ratios
Performance Measure ICICI Focused Bluechip Equity Fund
Sharpe Ratio
34.08%
M square measure
9.97%
Information ratio
123.88%
Sortino ratio (Variant 1)
1.3033
8
Agenda

About ICICI Prudential Focused Bluechip Equity Fund
Portfolio Attribution Analysis
Performance Analysis
Holding Period Analysis
9
Energy
After an initial spike towards $115 levels in June 2014 prices
have been on a downward spiral and recent developments on
the price front have opened up further negative implications
in the near term
Fundamental
Technical
Ample supply from the US and reopening of major export ports from Libya
Positive news in the Iraq conflict (US intervention))
Falling crude prices leads to decline in overall petroleum subsidy wherein OMCs are one of the key burden contributors along with
the Government of India and upstream companies. Hence, based on positive sentiments emanating from falling subsidies and
improving profitability, it is recommended to go long on OMCs.
After moving above the band for an year, the crude prices line
went below the 200 EMA
10
Consumer Staples
Many of the companies are overvalued with the average sector P/E ratio being much higher than average.

Supply side will come into effect later, so that will effect the performance of these stocks.
Inflation will contribute to pushing the prices to higher side, that will also effect the performance of these stocks.
Deficient monsoon is likely to adversely affect the sector as low agricultural production will create supply-side constraints for the
companies.

11
Financials
Muted Growth but Encouraging Signs
No substantial loan growth in Q1FY15 (+16% YoY)
Asset quality & NIMs have been stable, though fee income remained subdued due to a slowdown in corporate-based fee income
PAT for the sector grew 10.5% YoY (+9.8% QoQ) led by improving NII growth and tight leash on operating expenses
Better Positioned Going Forward
Disinvestment target of Rs. 58,425 crores set by govt. for FY15 to be led by disinvestment in PSU banks
Improving sales of two-wheelers and passenger cars expected to drive
retail credit growth
Decreasing stress on assets led by recovery in GDP growth, softening
interest rate and better loan growth expected to be major catalysts
going forward.
Incentives for long term infra finance by RBI would lead to lower cost of
funds for banks
12
Consumer Discretionary
Q1FY15 - Best quarter in terms of volume sales growth in the past nine quarters.
Investment in National Highways Authority of India and State Roads to the tune of Rs.37,880 to be positive for M&HCV segment.
All auto companies to benefit from 4-6% excise duty reduction, and interest rate cuts, if any, would lead to uptick in demand in
coming quarters.
Domestic market growth slowly improving, registering an 8% increase in the first quarter of 2014.
Indian generic pharma companies also expected to benefit from patent expiries in the US.
US represents a substantial growth opportunity for Indian drugmakers, with rich pipelines of generics awaiting US Food and Drug
Administration (FDA) approval.
However, recent price control directive by NPPA is a derogative step for the industry
Overall sectoral view positive
Healthcare
Increase in exemption limit for direct tax by Rs. 50,000 to lead to improved demand for consumer discretionary products.
13
Telecom
Year 2013 acted as a game changer for Telecom Industry
Government tried to reduce regulatory hurdles by providing clear information on issues such as mergers and acquisitions
Increase in the Foreign direct investment limit from 76% to 100%
Lower competition on the back of cancellation of several licenses
Recovery in growth expected going forward
Active subscriber growth slowed down from 19% in FY12 to 6% in FY13 to 9% in FY 14 beating total subscriber base growth and
growing in single digit
Increasing penetration of data services and healthy voice pricing can drive profitable growth going ahead.
Due to operating leverage from traffic growth and RPM improvement, EBITDA margin for Indian business is expected to improve
QoQ by 60-65 basis points for companies like Bharti/Idea
Indian telecom operators have registered a 12% rise in gross revenue in Q1FY15
Gradual improvement is expected in voice RPMs by industry in FY15
14
Materials
Recent major News/ Events
A category of stocks that accounts for companies involved with the discovery, development and processing of raw materials. The
basic materials sector includes the mining and refining of metals and chemical producers .
The Union Cabinet decision to hike royalty rates on major
minerals such as iron ore, bauxite and manganese will
squeeze margins of companies in the metals sector
Metals stocks were also hit by demand concerns after
Purchasing Managers' Index indicated China's factory sector
had slowed down to a three month low in August.
Fundamental
Due to weak demand, higher imports, subdued global prices
and seasonality domestic steel prices in the near term are
likely to remain under pressure
Materials sector is sensitive to changes in the business cycle as the sector supplies materials for construction, it depends on a
strong economy.
This sector is also sensitive to supply and demand fluctuations because the price of raw materials, such as iron, steel or other
metals, is largely demand driven
Global raw material prices(steel) are expected to remain soft
due to lower demand from China and new capacities coming on
stream
Base metals prices maintained their strength and advanced
further with lead joining the rally catching up zinc to a major
extent.
15
238.9
279.5
223.4
215.2
245.1
165.4
178.2 176.7 174.8 180.3
0
100
200
300
2010-11 2011-12 2012-13 2013-14 2014-15
Capital goods index rises in
Q1FY15
Q1 Capital Goods Index (Base Year 2004-05)
Q1 Manufacturing Index (Base year 2004-05)
Industrials
To get push by budgetary announcements and favourable govt. Policies

Clearance of Infra projects stuck in environment regulations

Introduction of INVITs will provide long term funds for the sector

Excluding Infra lending from bank reserve calculations will encourage lending to infra sector
Capital Goods Sector
Construction Sector
16
Utilities
Constitutes mainly power companies

7GW additional power capacity to be
installed in FY15

Tariff regulations will hurt the profit
earning capacity

Any negative outcome of SC verdict
on Coal Block Allocation will have
serious impact on power companies

Overall the sector outlook is not good
in next one year

Since the portfolio is slightly
underweight in this sector, so it will be
positive for the fund as compared to
benchmark

17
Information Technology
Unemployment rate falling in US
149
202
164
237
274
84
144
222
203
304
229
298
209
0
50
100
150
200
250
300
350
US Job data indicate economic
recovery
Non-farm Job data (Seasonaly adjusted)
Significant part of Revenue comes from US

The growth for the Tier 1 companies was
3.5% quarter-on-quarter; highest in the past
six months

In June 2014 -ending quarter, the US
economy surprised positively with over 4%
growth

Industry aggregate growth rates at 3.9&
(Quarter- on-Quarter) and 11.1% (Year-on-
Year) for the US region, benefits have
trickled down to the IT sector

Growing IT strategy consulting

US immigration bill may restrict the margins

Overall sector is expected to perform
exceedingly well in FY15

Portfolio is underweight in IT sector so it is
expected to underperform the benchmark

18
The fund has outperformed benchmark in past one year by 4.65%
The performance was mainly attributed to better stock selection within the sector (3.83% excess returns)
High within sector allocation effect shows ability of the analysts to identify the investment opportunities
With overall positive domestic and global economic outlook, sectors like Financials, Industrials, Energy and Healthcare
are expected to generate higher returns

The sectors in which fund is the overweight such as IT, Energy, consumer discretionary and healthcare are expected to
outperform the market
Ability to indentify good stocks will help to generate excess returns from bearish sectors
Overall, the fund is expected to outperform the benchmark and investors should invest in this fund
Conclusion
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Sources
Bloomberg, 2014. Portfolio Weights, Returns, Stock Prices, 10- year Generic Govt. Security Yield, CNX 100 index values.
Research, V., 2014. ICICI Prudential Focused Bluechip Equity Fund - Regular Plan - Fundcard
India, N. S. E. o., 2014. CNX 100 Stock list and Weights as of 31/03/2014
ET Intelligence.com Sector wise Reports

CMIE Economic Outlook Capital Goods Index
US employment Data- www. Bls.gov
Equitymaster.com- BSE Power returns

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Thank You!!