scorecardresearchICICI Prudential Equity & Debt mutual fund has given over 35% returns in the past year; Should you invest?

ICICI Prudential Equity & Debt mutual fund has given over 35% returns in the past year; Should you invest?

Updated: 12 Apr 2022, 08:39 PM IST
TL;DR.

This fund combines the dual benefits of capital appreciation and earning fixed income from a portfolio invested in equities and fixed-income securities. 

Investing in equity mutual funds

Investing in equity mutual funds

Investing in this fund has its benefits as most of the money is locked in equities and equity-related securities to earn good returns over the period while the amount locked in fixed-income securities ensures the stability of returns over the period. As opposed to most other equity funds synonymous with extreme volatility, this aggressive hybrid fund is top rated in its category owing to its extremely good performance between one and three years. Though the returns from this fund are slightly lower than funds that invest all their money in shares though it is relatively more stable when the stock markets decline.

You can either invest in a lump sum or continue to regularly invest in this fund through systematic investment plans (SIPs). The fund has earned returns up to 35.3 per cent in a year and around 20.6 per cent returns in three years. However, one must look at the five-year returns of any fund to check for its steadiness before deciding to invest in it.

ICICI Prudential Equity & Debt Growth Direct Plan

Launched on January 01, 2013, the current assets under management (AUM) amount to 19,274 crores. The risk factor is average in this open-ended fund with the return grade being categorised as “Above Average”. This explains the growing number of investments in this fund as returns exceed the fund’s inherent risk over a period.

The fund is benchmarked against the CRISIL Hybrid 35+65 Aggressive Index and can be bought to earn long-term returns. This fund charges an expense ratio of 1.23 per cent, which is a bit more than what other funds in this category charge from their customers.

The minimum amount you can invest in this fund is 5000 in a lump sum while you can make an added minimum investment of 1000 in a lump sum in this fund. The minimum investment you can make through SIPs is 100. The exit load is 1.00 per cent for redemption within a year.

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Asset allocation

This aggressive hybrid fund is majorly invested in large-cap stocks up to 60.4 per cent with a minor percentage of the fund’s capital being parked in mid-cap and small-cap stocks. Around 6.48 per cent of the fund is invested in midcap while 2.08 per cent is put away in small-cap stock investments. The remaining money is put in debt of which 11.09 per cent is put away in government securities while the remaining 10.85 per cent would be invested in very low-risk securities.

Currently, the total number of stocks in this fund is 58 out of which a majority of its holdings are in the financial and energy sectors while you find minimal holdings in the materials and textiles industries too.

The returns factor

The scheme has earned more than 35.03 per cent returns in a year while the absolute returns over five years are 109.6 per cent. Since its inception, the absolute returns on this fund have been 345. 8 per cent.

Name of the mutual fund 

(in Aggressive Hybrid Fund Category)

One-year returns 

(in %)

 
ICICI Prudential Equity & Debt Growth Direct Plan35.26
BOI AXA Mid & Small Cap Equity & Debt Growth Direct Plan34.35
Quant Absolute Growth Direct Plan33.39
Sundaram Equity Hybrid Growth Direct Plan28.76
Mahindra Manulife Hybrid Equity Nivesh Yojana Growth Direct Plan24.32
Edelweiss Aggressive Hybrid Growth Direct Plan23.98
 
Table listing the top aggressive hybrid funds in decreasing order of one-year returns

Tax treatment

If the units of this fund are redeemed within a year of investment, the gains from this fund are subject to short-term capital gain tax (STCG), i.e., 15 per cent.

Long-term investors redeeming their investments after one year will be exempted from tax on gains up to 1 lakh. More than 1 lakh gains would be subject to long-term capital gains tax, i.e., 10 per cent. There is no cess or surcharge on the funds sold before or after one year.

Disclaimer: Mutual funds are subject to market risks. Please read the offer document carefully before investing. Also, the Securities and Exchange Board of India has stipulated the latest guidelines categorising this fund under the “Very High Risk” category.

First Published: 12 Apr 2022, 12:58 PM IST