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Tarakki Times English August 2017

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A COMPILATION OF ICICI PRUDENTIAL MUTUAL FUND MEDIA VIEWS Professional Views MUMBAI | AUGUST 2017 | PAGES 10Pg. 2 Real test for investor is in navigatingAsset allocation is volatile timesone of the mainlearnings from the1994-95 cycle S Naren, ED & CIO ICICI Prudential Mutual FundPg. 4Safety is paramountin investmentdecision making Times of India | July 26, 2017 Rahul Goswami, CIO - Fixed Income Nimesh Shah falling cost of capital, higher debt. Some of these funds are ICICI Prudential Mutual Fund MD & CEO market share of organised even be model based, which ICICI Prudential Mutual Fund players as a result of GST imple- operate in a manner that whenPg. 5 mentation, improving operating markets are expensive, they Nifty 50 today (on Tuesday) leverage to name a few. reduce equity exposure and viceAvoiding froth to briefly crossed the 10,000-mark versa.create long term for the first time in the index Once all these factors fall invalue history, aptly reflecting the place, an uptick in earnings per What this mechanism tries to conviction of the strength in the share, can play out. This is likely ensure is that when the market Mrinal Singh, Deputy CIO Equities economy. From a global context, to take the markets higher from turns volatile, the downside is ICICI Prudential Mutual Fund India stands out for its stable current levels. largely cushioned owing to the macros and gradual but steady dynamic allocation of the fund. Fund Reviews pace of reforms. Even though It can be noticed that in any this calls for jubilation, it would liquidity-driven rally inflows keep We believe, this is one categoryPg. 7 be mindful to check the rea- coming in as long as the market of fund wherein an investor can soning of the exuberance seen in is edging higher. Thereafter, allocate lump-sum or invest viaICICI Prudential Balanced Fund the market. The two main drivers when this liquidity starts ebbing, systematic investment plan (SIP) of the current rally underway can markets tend to turn volatile. So, at any point in time in a marketBetting on Beaten-down be attributed to liquidity and the the real test for the investor is in cycle.Sectors expected rise in India Inc's navigating the volatile times and earnings. controlling one's greed and fear Investment into one of suchICICI Prudential Focused Bluechip in the current market cycle. funds gives an opportunity toEquity Fund The liquidity driven rally is mainly Often when the market rallies, enjoy better risk adjusted returns being fuelled by the increased investors tend to second guess - and tax efficiency at low volatility.A Solid Performer in the participation of retail investors in Is it time to book profits? Ironi- Such funds can be used as aLarge-cap Space capital market via the SIP route. cally, there is never a clear stepping stone into the world of As of June 2017, the monthly SIP answer to this question. mutual funds. With Nifty at all-Pg. 8 book for the MF industry stands time high, it's time to be prudent around an impressive `4,600 This is where financial products with one's investment.ICICI Prudential Long Term Plan crore. such as MFs come in. Balanced advantage category of funds are (The author is MD & CEO ofHigh on safety, returns On a year-to-date basis, data designed to invest in equity and ICICI Prudential AMC) suggests that both domestic andPg. 9 foreign investors have invested This is one category of fund whereinList of ICICI Prudential around ` 50,000 crore each into an investor can allocate lump-sumFunds in Mint the market, thereby lifting the or invest via systematic investmentETW Funds 100 market to new highs. plan (SIP) at any point in time in a market cycle. Tarakki Corner Currently, capacity utilisation for India Inc is at historically low Pg. 10 levels. As demand increases, corporates can manufacture Sanjay Mehta more without spending addi- ARN - 83262 tionally to build capacity. We Noida believe all the catalysts required for the recovery process in corporate earnings are in order -The information contained herein is solely for private circulation for reading/understanding of registered Advisors/ Distributors and should not be circulated to investors/prospective investors.

2 TARAKKI TIMES, AUGUST 2017 Interview Asset allocation is one of the main learnings from the 1994-95 cycle ET Now | July 25, 2017 ICICI Prudential Mutual Fund expects the liquidity in the banking system to remain ample which will further keep the spread between money market instruments and the overnight rate in remain range bound in the near to medium termS Naren growth rates in IT industry are think we are in a situation where be the last person correctlyED & CIO shooting up. we should be pessimist. exiting the markets that is notICICI Prudential Mutual Fund going to happen. If you look at the pharmaceutical At the same time when theICICI Prudential AMC, ED & CIO, industry, there are individual market is at 10000 one of the Asset allocation means youS Naren says “Asset allocation is problems due to FDA in many lessons I take from my experi- actually maintain a certain fixedone of the main learnings from companies and I think over the ences in the market and my view part of your net worth into equitythe 1994-95 cycle so you can exit next 12 to 24 months, some of is that this market resembles in this cycle.gracefully on the way down.” these companies will come out 1994-1995 that was the rest bull of their problems and that would market where FIIs were allowed This all I have learnt from 1994-Nikunj : Nifty has reached a cause a decent pop in each of entry into India and you had a 1995 cycle and that is what as alandmark but for a typical those individual stocks. massive liquidity boom from FIIs. company we are trying toinvestors who believes in communicate to investors thatcontra investing, this must be a So, you will have to buy, wait Just like that, we are seeing a big equities is not a riskless assetterrible time because patiently and wait for the FDA liquidity boom from local inves- class but having said that there iseverything is euphoric! problem to get resolved in that tors in this cycle. So what did I nothing to worry about the company and you will have learn from 1994-1995 boom? I earnings cycle at this point ofNaren : Yes, clearly if investors returns coming. But can you time learnt that you will have to actu- time.suddenly decide that I am going it to perfection? The answer is ally implement asset invest big money in equity no. Do you think that in the next Once the market goes into bull There is nothing to worry abouttoday I do not think you are two years. frenzy, you have to practice asset capex cycle at this point of timeinvesting cheap. You make more allocation. and we think that the top of themoney by investing cheap. That In PSU banks, clearly if the NPL earnings cycle is may be a year oris a reality. issue comes under control What do I as a CIO to practice two away. clearly again there is scope for asset allocation? We reco-Nikunj : Let us talk about two these stocks to go up but other mmend dynamic asset allocation Nikunj : I am going to take a leafpockets where you think there than these three pockets I would products, balanced advantage, o our last interaction. You hadis definitely if not a bubble or a say there is nothing cheap at this equity income balance. This is said the market could bebust, but definitely a lot of point of time. We spend all our my learning from 1994-1995. divided into four parts; best,mispricing and markets are time looking at them but nothing boom, bubble and then bust.over estimating the earnings appears to be cheap at this point The second learning that I learnt So best is behind us, boom isrecovery. Also, where do you of time. from 1994-1995 was that you do where we are. Before we movethink markets are under- not move from good quality from boom to bubble, howestimating the potential of Nikunj : What about earnings companies to bad quality much more do you think weearnings recovery and there is growth? It has been neutral companies just because they are need to travel?too much of pessimism and too rather than the negative cheap on price to earnings ormuch of fear? surprises coming in. What has price to book or things like that. Naren : We have spent a lot of been your outlook on the time debating this issue andNaren : There are only three overall earnings season? That is something we as a house clearly what came out of ourpockets of pessimism - some of are trying to avoid at this point of analysis is that in a bubble twothe PSU banks, pharma and Naren : I believe earnings time and we have a lot of debate things happen; one as a mutualtechnology. Other than these growth will come back in the within the company because the fund industry we start collectingthree, there are no pockets of next two years and so I am really best quality companies have money in theme funds.pessimism. The IT sector is not worried about earnings. become pretty costly and nowslowing down. It is difficult to There are a lot of people who you are tempted to buy the If you look at the last two bubblesgrow the sector at the same pace worry about earnings and capex cheaper companies so that is a we have collected money inthat it is used to. cycle but I believe that both debate which we are having. infrastructure in 2007 and earnings and capex cycle will technology in 1999. We thinkSo other stocks priced for that. It happen in the next two years. The third is that you cannot that once it reaches a bubble,appears to be more or less priced believe that you will actually get you will start getting money in afor that but at this point of time, While I can’t predict at which an exit on the way down. In 1994- theme fund.there is no evidence to say that quarter it will return, and where 1995 boom, no one got an exit on the earnings show a broad- the way down. So I believe that it The second what we have learnt based growth, but it might is very important to maintain is that from 1999, 2007, 1992 and happen in December quarter or your asset allocation in equity later, in 1992 you had replace- sometime later than that. I do not but if people think that they will ment cost theory of valuingThe information contained herein is solely for private circulation for reading/understanding of registered Advisors/ Distributors and should not be circulated to investors/prospective investors.

Interview 3TARAKKI TIMES, AUGUST 2017assets. In 1999 you had eyeball small caps and so for the last of the benchmark is banking. So disruption risks and that riskmethod of valuing assets. three months we are smiling on it is impossible to construct a does not exist with the staples. that area. portfolio without private sectorIn 2007 you had land bank model banks and we also think that if Nikunj : You would not get intoof valuing companies and in But otherwise I would say we are we look at the next 10 years any specific more observations2014 when the e-commerce not in a situation where we can outlook for private sector banks you have had about consumerbubble took shape we had gross either say that small caps or mid- continues to be good and many patterns but I like to just scanmerchandise value model of caps are cheap and I think the of the private sector banks through your portfolio and I dovaluing companies. best way to invest from now is to have valuable subsidiaries in see that utilities still have a big invest in dynamic asset allo- insurance, asset management ownership there, especiallySo in the last phase of the cycle cation categories, funds which and various other areas which Power Grid. The bet to buyyou have a top-line based have a fair amount of debt or will also help the entire outlook utilities a couple of years agovaluation model so the two was interest rates will comethings which have not happened We still believe interest down. Utilities is a businessare the two Ts, one is that you rates could come down which will benefit if interesthave not yet started getting from here as well. If you rates come down. That largemoney in a theme fund and you look at the inflation interest rate cut is now behindhave still not seen a top line numbers, and the kind of us. Does it make sense to stillbased valuation model. credit growth which buy into utilities or companies exists at this point of which will benefit if interestThe moment these two come time, there is scope for rates come down. That largethen you have to alert yourself to interest rates to come interest rate cut is now behindthe fact that you have reached down from here. us. Does it make sense to stillthe bubble phase of the market. buy into utilities or companiesSo that is why I would say we are arbitrage in them, those are the for private sector banks. which will benefit whenstill in boom phase maybe in the kind of funds to actually invest in interest rates will come down?second half of the boom phase, at this point of time. On consumer staples, lately webut we are not yet in bubble were a bit positive but now again Naren : We still believe interestphase. Nikunj : Let us talk about the valuations has gone back to rates could come down from pocket of consensus. In this stratospheric levels even relative here as well. If you look at theNikunj : The minute ICICI market, there are large pockets to the market so we have gone inflation numbers, and the kindPrudential plans a theme fund it where there is consensus buy; back to a situation we have found of credit growth which exists atis time to get out, right? one is private sector banks and the sector costly but there have this point of time, there is scope second I would imagine it is been times when while we have for interest rates to come downNaren : It does not need to consumer staples, they are found a sector costly the sector from here. Once we come to ahappen with the theme fund. All expensive yet the consensus continues to do well. situation where the interest rateof a sudden you had infra- there is still buy. Would you cycle is over, we will have tostructure funds collecting all the avoid these two large At least one of the advantages of look at our utilities in 2007. So it does not consensus dominated sectors? the consumer staples names is Otherwise, we continue to like it.need to happen just due to a there does not seem to be anylaunch, it can happen due to big Naren : See I do not think it is big risk of disruption in that Nikunj : Let me define the timeinflows in one thematic category possible to construct a portfolio sector whereas in many of the frame here. Next one year,as well. today without having private other areas in the market we three years and five years, sector banks and almost 30-35% actually have to worry about which is one category you thinkNikunj : What is the outlook has potential to give maximumwhen it comes to the kind of returns one, three and five?movement that we have seenin the broader end of the Naren : We had done some workmarket, are you convinced by and we will share that work withthe kind of upmove? What are you. At the level of valuations weyou advising clients when it are in, it is interesting to see thatcomes to the broader end of the the best outlook is for five yearsmarket, how to cushion the and then one year and the worstvolatility? outlook is for three years.Naren : See we are reasonably This is what our research work atclear that the best way to this stage of valuation when youcushion volatility is to invest in invest we found that it is a threedynamic asset allocation cate- year return which is mostgory and we have been believers suspect at this point of time.over the last one year that smallcaps and mid-caps are bothcostlier relative to large caps. It isonly in the last three months thatlarge caps have done muchbetter than both mid-caps andThe information contained herein is solely for private circulation for reading/understanding of registered Advisors/ Distributors and should not be circulated to investors/prospective investors.

4 TARAKKI TIMES, AUGUST 2017 Interview Safety is paramount in investment decision making Mutual Fund Insight | August 2017Rahul Goswami o n t h e i s s u e r. We b e l i e v e neutral indicates that it wants to mean that real rates have comeCIO, Fixed Income external rating is just one of the be vigilant and cautious about down, which currently are in aICICI Prudential Mutual Fund filters while analysing an inflation inching higher from the range of 2.5 per cent. As we have investment and therefore we do targeted 4 per cent levels by seen moderation in retailIn an interview with Kumar not solely rely on it. March 2018. inflation from lower double digitsShankar Roy, Rahul Goswami few years ago to current levels ofshares his views on the We believe that performance is a So, as long as the mandate about 3.5 per cent, it is natural formovement of interest rates, function of risk. Therefore, it is remains purely on targeting the nominal rates in the economyutility of dynamic duration funds important to manage the three inflation, the RBI is likely to to also come down.and why debt funds are key to critical risks: credit risk, liquidity maintain a cautious stance, withindividual investment portfolios. risk and interest-rate risk. It is willingness to further ease It is more important to keep sta-He also details the process important to give due weightage monetary policy whenever it gets ble real rates for investors, whichbehind selecting corporate to the credit quality of corporate space to do so. will be useful for savers and forbonds for his portfolios. bond funds. stability in the economy in the We are of the view that inflation long term. Investors looking toHow do you evaluate corporate Real interest rates have been is likely to remain well below the invest with an investmentbonds for your funds’ on an upswing. In the last two trajectory, as indicated in the last horizon of three years canportfolios? cycles, whenever real interest three policies by the RBI. We consider investing in short- to rates were at the peak, G-sec expect the RBI to change its medium- or dynamic-durationManaging credit is a very yields fell. If the same story stance towards easier monetary funds.technical function. At ICICI plays out this time, what debt policy once it gets more suretyPrudential, we have built a funds are likely to perform on inflation coming in line with its Debt mutual funds have beenstructured process around our better than others? targets. We expect that to slowly getting popular. But doasset-selection exercise. We happen by end of Q2FY2018. you think guaranteed returns inavoid concentration risk by The RBI has been judiciously other fixed-income avenues inadhering to the investment keeping the interest rates in Should retail investors change India pose a challenge to debtlimits, with adequate diversi- line with inflation expectations. their debt-fund portfolios funds?fication and tenor restrictions. At the same time, inflation whenever there is a major structurally has been falling fundamental change, like Most investors tend to associateThere are two independent much faster than the RBI’s change in interest rates? investing in mutual funds withteams involved while investing in expectations (based on their investing in equity markets.corporate bonds: the Origination various surveys). Investors should ideally maintain However, mutual funds invest inTeam and the Credit Team. The their debt-portfolio allocations other asset classes, like debt,latter is independent of the fund- This has resulted in real rates based on their risk appetite and too, which may be considered asmanagement team. It is a spe- becoming more positive. investment horizon such that an alternative to traditional fixed-cialised 10-member team with Historically, we have seen that their financial goals are met over return instruments.cumulative experience of over 60 whenever real rates have a period of time.years in credit. It evaluates remained positive, fixed income Debt mutual funds typically helpclosely each investment in has been the best-performing Do you think dynamic-duration add stability to the portfolio incorporate bonds for its credit risk asset class over a period of time. funds are a good bet to wade terms of returns profile. Secodly,before it is added to the scheme through the current fixed- they aid in the portfolio-portfolio. We firmly believe that the gov- income market? diversification exercise, which ernment’s fiscal prudence and comes in handy when otherOver the last one-two years, globally moderate commodity Yes, we think that dynamic-dura- asset classes are not performingsome asset-quality issues have prices will structurally keep India tion funds are more suitable well.surfaced in fixed-income funds. on the lower side of inflation. As because such funds give theHow do you ensure that such a result, interest rates in general fund manager higher flexibility to Therefore, we believe debtuncomfortable situations do will continue to moderate. move the portfolio allocation as mutual funds can be effectivelynot arise? per the evolving market condi- used for a achieving a variety of In such a scenario, the funds tions and economic scenarios. financial goals, including wealthWe seek to achieve safety, which are likely to perform better creation.liquidity and returns (SLR) in that are medium- and high-duration Fixed-income returns overallorder of priority while managing funds for a medium-term invest- have been coming down. How What is the biggest lesson thata variety of debt schemes. We ment horizon. should investors position you have learnt in your career?rely on internal research by themselves?conducting bottom-up analysis Now that the RBI has changed One major lesson I have learnt is its stance from accommodative Fixed-income returns have that while all variables may be in to neutral, how long do you moderated but we have to be your favour, you may still be think the RBI will be on a mindful of the real rate that an proved wrong. Hence, assign sustained pause? economy can offer. In absolute more weightage to the safety terms, as the inflation rate tapers aspect while taking investment The RBI’s change in its policy down, so will the nominal decisions. stance from accommodative to interest rates. But that does notThe information contained herein is solely for private circulation for reading/understanding of registered Advisors/ Distributors and should not be circulated to investors/prospective investors.

Interview 5TARAKKI TIMES, AUGUST 2017Avoiding froth to create longterm valueWealthForum | July 31, 2017In a nutshell rewarded in the years ahead. For the markets roughly one-third of Mrinal Singh successful value investing, their investing career. However, Deputy CIO EquitiesA true to label value fund, ICICI patience is the key factor. this under-performance is to ICICI Prudential Mutual FundPrudential Value Discovery Fund achieve long-termis going through a period of short WF: How does running an open outperformance. Very often, up with the valuation. By the veryterm underperformance in a ended value fund impact the companies purchased by value theory of value investing, themarket that's hitting new highs - strategy you follow when it investors are likely to be fund generally takes aan action replay of what comes to meeting investor undervalued and maybe conservative approach whenhappened to it in 2007. Investors expectations? perceived in a negative light. valuations become expensive.who want to make the most of a However, gradually, markets This can be seen the PE levelsbull phase in the near term are Mrinal: While running a value tend to recognize their value.likely to be disappointed, but fund what matters the most to us This phase of market discoveryMrinal argues that those who is if an investment is worthwhile of a stock's value is what leads tohave patience and stay invested, in terms of margin of safety. Very periods of underperformance.should be more than adequately often the stock picks in such a As can be seen from the chartcompensated over the market fund will not be market below, the fund hascycle, when the fund's cautious favourites. outperformed its benchmark invalue oriented stance stands it in terms of five- year returns on allgood stead at a time when froth However, there is nothing wrong days since inception.evaporates, taking down many in such a move as long as themomentum plays with it. He has returns are generated. While 40.00 Aug-09history from the 2007 period and investor expectations are 35.00 Jan-10thereafter to back his claim - justifiable, value investing 30.00 Jun-10advisors who advocate staying requires patience such that the 25.00 Nov-10invested in his fund through this strategy play out over a long 20.00 Apr-11testing period will be hoping that period of time. At times in a 15.00 Sep-11history repeats itself. For those growth market like India, it is 10.00 Feb-12on the sidelines, Mrinal difficult to get a value pick, which 5.00 Jul-12advocates getting client money is what happened during 2007 0.00 Nov-12into this fund now, as he builds a and is currently happening. -5.00 Apr-13high conviction concentrated WF: In pursuing value buys, Sep-13portfolio of value buys which he there is always a danger of Feb-14believes will make the most of falling into a value trap. How do Jul-14market opportunities when the you try to distinguish between Dec-14dust settles and sensible a likely value buy and a May-15investing gets adequately probable value trap? Oct-15rewarded again. Mar-16 Mrinal: Management evaluation Aug-16WF: How do you view value is one of the key aspects when it Jan-17investing at a time when the comes to keeping away from a Jun-17Indian equities are at a lifetime value trap. There could be goodhigh? business but with an ICICI Prudential Value Discovery Fund S&P BSE 500 incompetent management,Mrinal: As an investment which is likely to turn out to be a The information herein is solely for private circulation and forstrategy, value investing is all value trap. Over the years we reading/understanding of registered Advisors/Distributors and should notabout picking stocks where the have refined our management be circulated to investors/prospective investors.Data Source: MFI; Data inmarket price of a particular stock evaluation process which has % CAGR terms; Returns are calculated for the period between Aug 16,is below the stock's intrinsic held us in good stead. Once we 2009 to June 30, 2017. Past performance may or may not sustain in thevalue. However, in the current are fully convinced about the future. It is necessary to consult tax/financial advisor before makingmomentum market, earnings are management potential, only investments in mutual funds.playing a catch-up with the then do we go ahead withvaluation. So, finding value investing decisions. WF: After nine years of strong maintained by the fund over thestocks is a challenge. The only outperformance, on YTD basis years.solution here is to remain patient WF: Do you think a phase of ICICI Prudential Valuein such a phase. underperformance is engrained Discovery has slipped into As of June 2017, the portfolio of in value style of investing? negative alpha territory. To ICICI Prudential Value DiscoveryHistorically, it has been observed what will you attribute this? Fund is available at a reasonablethat once in every ten years, Mrinal: There are two important valuation of 20x PE as comparedthere will be atleast one year principles that are used when Mrinal: Value as a style invariably to the broader market (S&P BSEwhen value investing style is selecting stocks under value underperforms in a momentum 500) which is at 25x.likely to underperform. For those investing - intrinsic value and market. This is not the case ofwho survive that phase, by margin of safety. Studies have only 2017, such times were seen However, as the euphoria phasecontinuing to staying true to shown that famous value in 2006-2007 as well. We believe tapers off, and valuations turnvalue style, can be richly investors have underperformed that we are in the midst of a rally reasonable, the fund where the earnings are catching outperforms the market by a 150.0 100.0 50.0 0.0 -50.0 -100.0 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 YTD+ ICICI Pru Value Discovery 63.9 28.8 39.4 -54.5 131.3 27.7 -23.8 45.7 8.3 73.8 5.4 4.6 11.6 S&P BSE 500 36.7 39.0 62.7 -58.0 90.2 16.4 -27.5 31.0 3.3 37.0 -0.8 3.8 Outperformance/Underperformance 27.3 -10.2 -23.2 3.6 44.1 11.4 3.7 14.7 5.1 36.8 6.3 0.8 19.3 -7.7 The information herein is solely for private circulation and for reading/understanding of registered Advisors/Distributors and should not be circulated to investors/prospective investors.The information contained herein is solely for private circulation for reading/understanding of registered Advisors/ Distributors and should not be circulated to investors/prospective investors.

6 TARAKKI TIMES, AUGUST 2017 Interview ICICI Prudential Mid & Gradually increasing Value Discovery Fund S&P BSE 500 Small Caps exposure to Large-caps Heavy -2.7%Minimum Return 7.6% 23.9% 90 10.6%Maximum Return 34.5% 6.3% 80 70.34%Average Return 19.7% 70 67.58%Standard Deviation 5.9%No. of days the fund provided: 60Less than 8% return 7 709 508-12% return 281}231 260}468 40 19.90%12-15% return 201 19415-18% return 88% 39% 30 20 25.40%More than 18% return 1,132 321 10 Total No. of Days: 1,952The information herein is solely for private circulation and for 0reading/understanding of registered Advisors/Distributors and should notbe circulated to investors/prospective investors. Data Source: MFI; Data Dec-06as of June 30, 2017. Returns in CAGR % terms. Past performance may or Dec-07may not be sustained in future. It is necessary to consult tax/financial Dec-08advisor before making investments in mutual funds. Dec-09 Dec-10 Dec-11 Dec-12 Dec-13 Dec-14 Dec-15 Dec-16 LARGE CAP Mid+Small Debtwide margin, which is clearly Source: MFI Explorerseen in the fund's historical Current Portfolio Positioningperformance as well. (Shownabove) WF: A value fund in a market Software Stocks with high quality earnings and available at attractive valuations. Fundamentally sound businesses could emerge successful from theYTD -Year to Date. *YTD as on that's scaling new highs every ongoing digital disruption in the sector.June 30, 2017. Data Source:MFI; Data in % absolute returns; day, in an environment where Industrial Products & Capital Could gain from government’s focus on infrastructure development.Returns are calculated for each Goods New orders could increase capacity utilisation and profit marginsyear. Past performance may or valuation concerns abound,may not sustain in the future. It is Pharma & Recent correction in a few stocks of the sector due to regulatory issuesnecessary to consult tax/ seems frankly as a counter- Healthcare Services has made valuations advisor before makinginvestments in mutual funds. intuitive bet. What is the The information herein is solely for private circulation and forBecause it takes time for value reading/understanding of registered Advisors/Distributors and should notstrategy to play out, we maintain investment argument for this be circulated to investors/prospective investors. Data as of June 30, 2017;that the ideal investment period The stock(s)/sector(s) mentioned in this slide do not constitute anyto see the full effect of its fund at this time? recommendation and ICICI Prudential Mutual Fund may or may not haveinvestment style would be 5 any future position in this stock(s). Past performance may or may not beyears and above. Mrinal: At a time when market sustained in the future. The portfolio of the scheme is subject to changes valuations are stretched in within the provisions of the Scheme Information document of theIn this fund's history (since Aug several pockets, with the mid Scheme.16, 2004), 88% of the time the 5 and small caps expensive whenyear rolling returns were more compared to large caps, the fund WF: You have included your key holdings) - which arethan 12%. Through all of the is building a portfolio which is software as one of your key much cheaper on valuations.above instances, it can seen that poised to outperform once the sectoral positions now, and Can you please walk usthe strategy followed typically valuation moderates. So, while have Wipro, Infosys and HCL through your thinking on theleads to significant outper- the approach is conservative, the Tech in your major holdings. value propositions in privateformance which more than fund is building aggression by Can you please help us and PSU banks?compensates for short term way of a concentrated portfolio, understand the valueunder-performance. As alluded with 41 high conviction stocks, proposition in software Mrinal: Just because a stock isbefore, one has to remain patient as of June 2017. The fund had companies, in the context of cheap doesn't make it a valueand stay invested. And rewards higher number of stocks around growing fears of continued buy. When it comes to bankingcan be seen in the SIP 60 stocks in Jan 2016. The fund sluggishness in top line, space, we believe private banksperformance. has shifted the portfolio from ongoing AI led disruption, and are better placed to be a proxy for midcap &smallcap to large-cap, visa regulations that have economic growth. Cyclically we since the midcaps &smallcaps upset established delivery are quite close to the bottom of have turned expensive.` The models? the cycle and things could start fund is taking the contrarian looking up in a few quarters for approach (value buy) while Mrinal: True, software industry corporate banking business. allocating to pharma and as a whole is facing a challenging These banks have suffered software - two sectors which are time in the midst of digital double whammy of low growth currently stressed. Through disruption worldwide. As a and high NPLs over the past few select stocks in industrials and result, stocks with high quality years and we believe that they utilities, the fund seeks to tap earnings are available at are close to the end of this into the capex recovery cycle. attractive valuations, making it vicious cycle. an attractive value buy. We are of 5 year SIP Returns the view that fundamentally WF: If you were only focusing sound businesses could emerge on deep value and had theICICI Prudential Value Discovery Fund Amount Invested Present Value Returns(%) successful from the ongoing luxury of a 5 year horizonS&P BSE 500 6,00,000 9,83,237 19.99 disruption phase. As that occurs, without daily NAV pressures to 6,00,000 8,58,697 14.42 the sector is likely to be re-rated. contend with, which sector/theme would you be 10 year SIP Returns WF: In the banking space, you most confident of investing in have a much larger exposure to now?ICICI Prudential Value Discovery Fund Amount Invested Present Value Returns(%) private sector banks in your keyS&P BSE 500 12,00,000 34,47,511 20.08 holdings (HDFC Bank, ICICI Mrinal: All of themes that we 12,00,000 21,74,933 11.48 Bank, Kotak Mahindra Bank) - currently hold is likely to remain. all of which are rich onThe information herein is solely for private circulation and for valuations, as compared toreading/understanding of registered Advisors/Distributors and should PSU banks (only SBI present innot be circulated to investors/prospective investors.Data source: MFI.As on June 30, 2017. Returns are calculated on XIRR basis. Thecalculation is based on an investment of Rs. 10,000 pm since June2012 & June 2007 respectively and invested till June 2017. Data is ason 30thJune 2017. Past performance may or may not sustain in thefuture.The information contained herein is solely for private circulation for reading/understanding of registered Advisors/ Distributors and should not be circulated to investors/prospective investors.

Fund Review 7TARAKKI TIMES, AUGUST 2017 ICICI Prudential Balanced Fund Betting on Beaten-down SectorsEconomic Times | July 18, 2017Abalanced scheme suits equity investors contrarian investment strategy. This is a key years are the ones which have attracted the who are particularly concerned about thing that distinguishes the scheme from other attention of the fund managers. On the debt insulating their portfolio from extreme balanced funds. The fund managers are not side, the scheme's portfolio consists ofvolatility of stock markets. A balanced scheme interested in employing inconsistent stock- government securities and bonds with moregives investors the best of both the worlds - selection strategy and show superior returns. than AA ratings, which provides reasonablyequity and debt. Among the balanced The scheme has a good mix of large-sized good assurance to investors about the safetyschemes, 100 Pru Balanced Fund has been a established companies on the equity side. of their capital. The scheme has been a topdistinguished performer. performer and has delivered 16-20% returns in Prominent companies in sectors such as the past three- and five-year periods, though itsFund managers Sankaran Naren, Manish telecommunications, power and IT, which may category of funds has given 14 and 16%Banthia and Atul Patel manage the scheme. On seem out of favour at present, may see a returns during the same period.the equity side, the scheme is known for its turnaround in earnings cycle in the next twoPORTFOLIO CHANGE (PAST 6 MONTHS) RETURNS (in %) HYBRID BALANCED EQUITY ORIENTED-AVGNew Entrants Complete Exits Increase In Allocation PERIOD CAGR SIP CAGR ANNUALISED RETURN RETURN RETURN 16.34IDFC Wipro Tata Power 1 Year 21.04 22.99NTPC HDFC Bank State Bank Of India 3 Year 16.60 15.41ONGC CESC ICICI Bank 5 Year 20.00 17.33 20.66 22.25RETURNS PEER COMPARISON (in %) 5-YEAR Expert Take 18.73 1-YEAR 3-YEAR 19.34 Kaustubh Belapurkar 20.04 DirectorBirla Sun Life Balanced 17.99 16.85 Fund Research at Morningstar Investment'95 Fund ICICI Balanced Fund is a true blue balanced scheme. The fund isHDFC Balanced Fund 21.83 17.36 managed in Naren's trademark contrarian style has a large-cap focus. As regards fixed-income allocation. it is also managed actively. TheL&T India Prudence Fund 19.86 17.72 fund is suitable for risk-averse or first-time investors looking to take equity exposure with at least a three-year investment horizon.Source: Accord Fintech, Compiled by ETIG Database ICICI Prudential Focused Bluechip Equity FundA Solid Performer in the Large-cap SpaceEconomic Times | July 04, 2017 Prudential Focused Bluechip Equity Fund. Fund benchmark by a wide margin. In the past three- manager Manish Gunwani has been with the year and five-year periods, the scheme hasThere is a considerable degree of scheme for over five years. It invests close to delivered 12% and 17% returns, respectively uncertainty concerning the way Goods 90% of its portfolio in large companies and the while the Nifty 50 has delivered 7% and 14% and Services Tax (GST) would impact remaining in mid-sized companies. returns, respectively in the same period. In theearnings of corporate India. This has put most past six months, Gunwani has bought and alsoexperts and analysts in wait and watch mode. There are a few parameters the scheme's fund enhanced exposure in a mix of high growth andGiven this situation, for long-term retail manager takes into account before selecting a value stocks. These companies represent theinvestors, it makes sense to be with schemes stock. These are: dividend record, cash flow aforementioned selection parameters and arethat have a focus on large-sized companies, from operations, robust corporate governance likely to do well in the coming quarters. A fewwhich are relatively better equipped to deal and dominant market share. These parameters prominent companies it has invested in includewith uncertainties of GST. facilitate the selection of superior performers InterGlobe Aviation, ICICI Bank, Muthoot among large companies. This strategy has paid Finance, Asian Paints and Ashok Leyland.One such scheme that has performed well in off for the scheme as it has beaten itsthe past three-year and five-year periods, withrespect to its benchmark (Nifty 50), is ICICIPORTFOLIO CHANGE (PAST 6 MONTHS) RETURNS (in %) EQUITY DIVERSIFIED LARGE CAP- AVGNew Entrants Complete Exits Increase In Allocation PERIOD CAGR SIP CAGRHindalco Indus. Bharat Heavy Elec. Tata Power Company RETURN RETURN ANNUALISED RETURNAshok Leyland Ambuja Cements State Bank Of IndiaIdea Cellular Grasim Industries ITC 1 Year 18.28 20.66 19.40 3 Year 12.18 13.63 11.71 17.31 15.21 5 Year 17.00RETURNS PEER COMPARISON (in %) 5-YEAR Expert Take 1-YEAR 3-YEAR Suresh Sadgopanl FounderInvesco India Dynamic 16.86 11.20 16.17 Ladder7 Financial AdvisoriesEquity Fund ICICI Focused Bluechip is a fund that has been a consistent performerInvesco India Growth Fund 19.03 14.21 18.19 since inception in 2008. This is a true large-cap fund that takes concentrated exposures and follows a bottom-up approach to pickingJM Multi Strategy Fund 33.34 16.05 19.83 stocks. This fund does not take outsized risk to deliver returns. The downsides have been contained well, too. This is a good large-capSource: Accord Fintech, Compiled by ETIG Database fund to have in the portfolio.TThhee iinnffoorrmmaattiioonn ccoonnttaaiinneedd hheerreeiinn iiss ssoolleellyy ffoorr pprriivvaattee cciirrccuullaattiioonn ffoorr rreeaaddiinngg//uunnddeerrssttaannddiinngg ooff rreeggiisstteerreedd AAddvviissoorrss// DDiissttrriibbuuttoorrss aanndd sshhoouulldd nnoott bbee cciirrccuullaatteedd ttoo iinnvveessttoorrss//pprroossppeeccttiivvee iinnvveessttoorrss..

8 TARAKKI TIMES, AUGUST 2017 Fund Review ICICI Prudential Long Term PlanHigh on safety, returnsBusiness Standard | July 30, 2017 A CLEAR OUTPERFORMERLaunched in January 2010, ICICI ICICI Prudential Long Term Plan Category Prudential Long Term Plan features in Benchmark the debt long category of CRISILMutual Fund Ranking. The fund has been Returns (%) 16constantly ranked in the top 30 percentile 12(CRISIL Fund Rank 1 or 2) in the three 4.53quarters ended March 2017. 3.23 8 3.57Since its launch, the fund maintained a low 4duration portfolio (less than 1 year); 13.10 0however, after March 2014, it switched to a 10.26long duration portfolio strategy. Over the lastthree years the fund has maintained an 10.68average portfolio duration of 7.42 years. 12.87The fund's primary objective is to generate 10.34income through investments in a range of 10.92debt and money market instruments of 12.49various maturities with a view to maximise 10.41income while maintaining the optimum bal- 11.02ance of yield, safety and liquidity. 12.17 9.46Manish Banthia has been managing the fund 9.61since September 2012. He was joined by 10.94Anuj Tagra in January 2015. The fund had aquarterly average AUM of `2,206 for the 9.06June 2017 quarter. 8.85Superior performance 6 Months 1 Year 2 Years 3 Years 5 Years 7 YearsThe fund has consistently out-performed its SIP Returns Total Amt ICICI Prudential Benchmarkbenchmark (CRISIL Composite Bond Fund Invested Long Term PlanIndex) and the peer set (schemes defined 1-year (Principal `)under the debt long category of CRISIL 3-yearMutual Fund Ranking March 2017), gaining 5-year Market Returns Market Returnssignificant margins across all trailing periods 7-year Value (`) (%)considered. Value (`) (%) 12,740 12.08An investment of `11,000 in the fund on 12,000 12,595 9.67January 20, 2010 would have grown to`2,138 (10.64 per cent CAGR) on July 25, 36,000 43,222 12.39 42,154 10.652017 vis-à-vis `1,877 (8.74 per cent) in thepeer group and `1,864 (8.64 per cent) in the 60,000 82,192 12.63 77,753 10.38benchmark. 84,000 1,29,012 12.11 1,19,005 9.83Duration management Returns as on 25 July, 2017 Returns up to one year are absolute, rest annualisedThe fund manager has maintained highduration in the past three years, as Portfolio analysis and 'AAA & Al’ securities. G-secs comprisedmentioned, though it was tad lower than in 80 per cent of the portfolio, on average,the latter half of the period considered. In the past three years, the fund has upholding its objective of safety and witnessed some shift from government liquidity.Modified duration varied in a wide range of securities (G-secs) to corporate debt.5.28 to 9.13 years, averaging 7.42 in three Exposure to G-secs averaged 86 per cent At the same time, it has earned higheryears. High duration of the fund bodes well before September 2016, after which returns than its peers by maintaining higheras the interest rate declined during this exposure to this category was reduced to 61 duration and benefit from the falling interestperiod, which resulted in 16 higher returns per cent, on average, and exposure to 'AAA & rates.than the benchmark and peers. Al+’ (18.60 per cent as of June 2016) and 'AA category & Al' (10.69 per cent) securities increased simultaneously. The fund has been conservative on the credit risk front in three years; more than 90 per cent of its portfolio was allocated to G -secsThe information contained herein is solely for private circulation for reading/understanding of registered Advisors/ Distributors and should not be circulated to investors/prospective investors.

Fund Review 9TARAKKI TIMES, AUGUST 2017mint List of ICICI Prudential Funds in Mint50BESTFUNDSMint | July 2017FUND CORE 3-year return (%) 5-year return (%) 10-year return (%) Fund size (Rs cr) 14,289.37LARGE CAP 7,128.02ICICI Prudential Focused Bluechip Equity Fund 12.98 17.52 NA 80.22MULTI CAP 11.88 17.64 12.80 17,568.36ICICI Prudential Dynamic Plan 19.04 21.69 NAICICI Prudential Nifty Next 50 Index Fund 13.01 21.39 17.07 4,502.68ICICI Prudential Value Discovery Fund 10.69 18.17 13.07 16.393.78TAX PLANNING 14.68 19.33 12.67ICICI Prudential Long Term Equity Fund(Tax Saving)EQUITY-ORIENTEDICICI Prudential Balanced FundFUND CORE 3-month return (%) 6-month return (%) 1-year return (%) Fund size (Rs cr)DEBT-ORIENTEDSHORT TERM 2.97 4.52 8.93 11,636.64ICICI Prudential Short Term PlanETW Funds 100List of ICICI Prudential Funds in the Economic Times WealthET Wealth | July 2017 Value Research Returns (%) FUND Fund Rating 3-month 6-month 1-year 3-year 5-year 6.62 17.58EQUITY: LARGE CAP 7.54 10.86 18.02 12.33 21.91 2.93 18.81ICICI Prudential Focused Bluechip Equity Fund 0.87 13.49 22.65 17.54 21.33EQUITY: MULTI CAP 3.63 12.2 17.78 12.79 19.27ICICI Prudential Nifty Next 50 Index Fund 3.65 4.54 8.62 11.53 12.37ICICI Prudential Indo Asia Equity Fund 2.12 9.06ICICI Prudential Value Discovery Fund 6.99 16.47 14.09HYBRID: EQUITY ORIENTED 3.04 9.76ICICI Prudential Balanced Fund 3.6 7.7 12.24 12.15 12.05HYBRID: DEBT-ORIENTED CONSERVATIVEICICI Prudential MIP 25 (An open ended Income fund. 3.88 8.52 10.23Monthly income is not assured and is subject to the 5.24 9.83 10.22availability of distributable surplus) 7.07 11.59 12.48ICICI Prudential Regular Income Fund(An open ended income fund. Income is not assured andis subject to the availability of distributable surplus)DEBT: INCOMEICICI Prudential Banking & PSU Debt FundDEBT: DYNAMIC BONDICICI Prudential Long Term PlanThe information contained herein is solely for private circulation for reading/understanding of registered Advisors/ Distributors and should not be circulated to investors/prospective investors.

10 TARAKKI TIMES, AUGUST 2017 Tarakki CornerYour YToaur rTaarakkkki CiornCer ornerSanjay Mehta Sanjay Mehta is an Associate Financial Planner in and an App to provide customers with complete financialARN - 83262 Investment Planning, Tax Planning; Estate Planning, Risk portfolio management at their fingertips. He is a firmNoida Analysis; Insurance Planning, Retirement Planning and believer of investor education and keeps conducting Employee Benefits certified by Financial Planning various seminars on financial freedom. He also writes Standard Board (FPSB) India. He is also NSE and BSE articles on finance and keep his clients updated through E- certified. But before his endeavors in financial services Mails & blogs. space, he has over two decades of experience in the hospitality space. Currently, Sanjay is handling assets of around ` 60 crores with mutual funds constituting approximately ` 35 crores In 2010 he quit his job in the hospitality space, received his approx. He is serving more than 500 clients and has a certifications from FPSB, National Institute of securities monthly SIP book of ` 60 lakhs. As he shares his Markets, NSE and BSE and started his journey as a investment mantras, he says, a big part of financial Financial Advisor. The experience of customer dealings & freedom is having your heart and mind free from worry an in-depth understanding of customer's needs & about the what-ifs of life. For him, Asset Allocation is one expectations is what he carried with him from his days in of the safest ways to achieve financial freedom. hospitality. These qualities are paramount in today's business environment in order to connect well with your For aspiring professionals in advisory space, here are the clients and understand their needs. golden words to keep in mind. Be honest and transparent in your client dealings and always think of what is best for In the year 2010, he launched SMFS - Sanjay Mehta your clients. Always remember investing is not rocket Financial Services. SMFS is one of the leading financial science but is all about discipline and patience. consulting firms. Very few realize the benefits of good and sound investing. He believes that investing is not a rocket science and if one is patient and disciplined, one can always achieve the set goals. In his initial days, his clients constituted of his ex - colleagues, friends, neighbours etc. Over the years they have referred him to many others and currently he has over 500 clients. He has recently launched a revamped WebsiteThe information contained herein is solely for private circulation for reading/understanding of registered Advisors/ Distributors and should not be circulated to investors/prospective investors.Mutual Fund investments are subject to market risks, read all scheme related documents carefully. Tarakki Times is compilation of articles published in various newspapers/magazines. Due credit isgiven by disclosing the source for such articles/publication. The articles covered are excerpts of publication by an independent agency and is circulated to the empanelled Advisors/Distributors of ICICIPrudential Asset Management Company Limited (the AMC). ICICI Prudential Mutual Fund (the Fund) does not warrant the accuracy, reasonableness and/or completeness of any information. Alldata/information used in the preparation of this material is specific to a time and may or may not be relevant in future post issuance of this material. The AMC tak es no responsibility of updating anydata/information in this material from time to time. The AMC (including its affiliates), the Mutual Fund, The Trust and any of its officers, directors, personnel and employees, shall not liable for any loss,damage of any nature, including but not limited to direct, indirect, punitive, special, exemplary, consequential, as also any loss of profit in any way arising from the use of this material in any manner. Thesector(s)/stock(s) mentioned in this communication do not constitute any recommendation of the same and ICICI Prudential Mutual Fund may or may not have any future position in thesesector(s)/stock(s). The recipient alone shall be fully responsible/are liable for any decision taken on this material.

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