Exploring the Performance and Prospects of ICICI Pru Bharat 22 ETF

Analyzing ICICI Pru Bharat 22 ETF: A Detailed Look

Fund Name: ICICI Pru Bharat 22 ETF
Fund Type: The ICICI Pru Bharat 22 ETF is categorized under the “FoFs: Domestic” sector, focusing primarily on a diversified portfolio that aligns with the S&P BSE Bharat 22 Index.
Fund Manager Background: Managed by Nishit Patel, the fund benefits from Patel’s seasoned expertise in managing funds that aim for long-term capital growth through investments in ETF units. His strategic approach is evident in the fund’s performance and portfolio management.

Holding Analysis or Portfolio Breakdown

The ICICI Pru Bharat 22 ETF holds a significantly concentrated position, with 99.95% of its portfolio in Bharat 22 ETF units. This high concentration reflects a focused investment strategy, closely mirroring the S&P BSE Bharat 22 Index. The remaining small portion comprises Tri-Party Repo (TREPS) and Net Current Assets, adjusting for liquidity and fund operations needs.

Returns and Rankings in Their Category

The fund has showcased impressive returns since inception, with an overall return of 20.53%. It stands out in its category, consistently ranking at the top across various timelines: 3-month (11.19%), 6-month (33.41%), 1-year (71.64%), and 3-year (40.93%). Its performance has notably surpassed the S&P BSE Bharat 22 Index and the category average, making it a leading choice among peers.

How Old Is the Fund

Incepted on 29 June 2018, the fund has been operational for nearly six years, establishing a track record of robust performance and stability.

Pros:

Low Expense Ratio: At 0.09%, the fund’s expense ratio is significantly lower than the industry average, maximizing returns for investors.
Strong Performance: It has consistently outperformed its category and benchmark, indicating effective management and strategic investment choices.
Experienced Management: The fund benefits from the expertise of its fund manager, Nishit Patel, contributing to its strong performance.
Focused Investment Strategy: The concentrated portfolio in Bharat 22 ETF units reflects a clear investment strategy aligned with the Bharat 22 Index.

Cons:

High Concentration Risk: The nearly exclusive investment in Bharat 22 ETF units could pose a concentration risk, making the fund’s performance heavily dependent on the index’s constituents.
Limited Diversification: With the bulk of assets in a single ETF, the fund lacks diversification across sectors or assets, which might not suit all investors seeking a more diversified exposure.

Conclusion: The ICICI Pru Bharat 22 ETF emerges as a compelling option for investors looking for focused exposure to the Bharat 22 Index with the added benefit of low expenses and strong management. However, potential investors should consider the concentration risk and limited diversification when evaluating its suitability for their investment portfolio.

TLDR: ICICI Pru Bharat 22 ETF – A Comprehensive Analysis for Every Investor

For High-Risk Investors:

Ideal for Long-Term Investment (>5 years): With a robust return of 21.41% over 5 years and topping its category, this ETF is promising for investors seeking substantial growth over a longer horizon.
Short-Term & Medium-Term Viability: While the fund has shown exceptional 1-year (71.64%) and 3-year (40.93%) returns, the high concentration in the Bharat 22 ETF might present volatility, making it a potentially riskier short-term choice.

For Medium-Risk Investors:

Medium to Long-Term Potential: Given its performance, expense ratio (0.09%), and AUM (₹886.1 Cr), it balances risk and reward well for medium-term (1-5 years) investors looking for growth with moderate risk.

For Low-Risk Investors:

Consider with Caution for Long-Term: The fund’s low expense ratio and substantial AUM suggest stability. However, its concentrated holding poses a diversification risk which low-risk investors might find unappealing.

Key Metrics:

NAV: Not explicitly listed, but aligned with market performance.
Expense Ratio: At 0.09%, significantly lower than peers, enhancing long-term return potential.
Turnover Ratio: Not provided, but a lower ratio typically indicates a stable investment strategy, preferable for long-term investing.
Returns in Last 1, 3, 5 Years: Exceptional performance with 71.64% (1Y), 40.93% (3Y), and 21.41% (5Y) returns, consistently outperforming peers and benchmarks.
Advanced Ratios: High Alpha (53.98) suggests strong performance relative to risk, while the Sharpe ratio (3.59) indicates good return on investment risk. However, the fund’s high standard deviation (15.31) signals potential volatility.
Peer Comparison: Dominates its category in terms of returns and expense ratio, making it an attractive option for those willing to accept its risk profile.

Analysis:

Strengths: Outstanding returns, extremely low expense ratio, and high alpha indicate the fund’s ability to outperform its benchmark and peers with minimal additional cost.
Weaknesses: Concentrated investment in the Bharat 22 ETF may expose investors to sector-specific risks and volatility, making diversification within the portfolio crucial for risk management.

Conclusion: The ICICI Pru Bharat 22 ETF is a standout for investors seeking high growth over the medium to long term, provided they are comfortable with its risk profile and concentration. Low-risk investors should weigh its performance against the potential for volatility due to its focused investment strategy.

Key Metrics

- Expense Ratio: 0.09% (low compared to category average of 0.26%, which is good for returns)
- Turnover Ratio: Data not provided
- Assets Under Management (AUM): Rs. 886.1 crores as of Feb 29, 2024 (indicates good popularity)

Returns:
- 6 month: 33.41%
- 1 year: 71.64%
- 3 year: 40.93%
- 5 year: 21.41%
Inception Date: June 29, 2018
Fund Manager: Nishit Patel (experienced)

Pros

Very low expense ratio of just 0.09% compared to category average of 0.26%, allowing more of returns to be passed to investors
Has significantly outperformed the category average across 6 month, 1 year, 3 year and 5 year periods, ranking 1st in the category
Decent AUM of Rs. 886 crores, showing it is a fairly popular fund
Managed by ICICI Prudential AMC, which is a well-known and reputed fund house without any major corruption charges
Tracks the S&P BSE Bharat 22 Index, providing exposure to select PSU companies

Cons

As a passively managed ETF, returns will mirror the underlying index and fund manager’s skill doesn’t play a role
Turnover ratio data is not provided, so cannot comment if portfolio churn is high or low
Being a thematic ETF, it has a concentrated portfolio so risks can be higher compared to a diversified equity fund

In summary, the Bharat 22 ETF seems to be a good choice for investors looking for PSU exposure, given its very low expense ratio, strong past performance compared to peers, and management by a top fund house. However, investors should be aware of the risks of a concentrated portfolio and make sure it fits their risk profile and investment goals. More data on portfolio turnover would have helped provide a complete picture.

Here is an analysis of the ICICI Prudential Bharat 22 FOF based on the provided data:

Top Holdings

Bharat 22 ETF: 99.95%
Tri-Party Repo (TREPS): 1.04%
Net Current Asset: -0.98%

The fund invests almost entirely in the Bharat 22 ETF.

Advanced Ratios

Compared to the category averages:

Standard Deviation: Fund is much higher at 15.31% vs 6.94%
Beta: Fund is lower at 0.26 vs 0.42
Sharpe Ratio: Fund is slightly higher at 3.59 vs 3.44
Sortino Ratio: Fund is slightly lower at 5.89 vs 6.19
Alpha: Fund is significantly higher at 53.98% vs 19.03%

The fund has delivered superior risk-adjusted returns (alpha) compared to peers.

Peer Comparison

The fund has outperformed peer funds across key return periods:

6 Month Return: 33.41% (Rank 1)
1 Year Return: 71.64% (Rank 1)
3 Year Return: 40.93% (Rank 1)
5 Year Return: 21.41% (Rank 1)

It also has a very low expense ratio of 0.09% compared to peers.

Fund House and Investment Objective

Fund House: ICICI Prudential Mutual Fund
Investment Objective: ICICI Prudential BHARAT 22 FOF (the Scheme) is a fund of funds scheme with the primary objective to generate returns by investing in units of BHARAT 22 ETF.

ICICI Prudential is a well-known and reputed fund house.

In summary, the ICICI Prudential Bharat 22 FOF appears to be an excellent fund choice given its:

Very low expense ratio of 0.09%
Market-beating returns across time periods, ranking 1st among peers
Superior risk-adjusted returns (alpha)
Reputed fund house backing

However, some key cons to note:

As an FOF investing in a thematic ETF, it has a very concentrated portfolio
Much higher volatility than category average
Turnover ratio data not available to assess portfolio churn

Overall, the fund suits investors looking for PSU exposure who can tolerate higher risk. The strong performance track record and low costs make it an attractive offering in its category.

Benchmark and Index

The fund tracks the S&P BSE Bharat 22 Index. The scheme’s benchmark indices breakdown is:

S&P BSE Bharat 22 Index: 100%

As an FOF investing in the Bharat 22 ETF, the fund’s underlying holdings will mirror those of the index.

Risk Profile

While the risk profile is not explicitly stated, we can infer that the fund likely has a HIGH risk profile because:

It is an equity fund investing in a thematic ETF with a concentrated portfolio
The underlying Bharat 22 ETF has a high portfolio concentration in the top 10 holdings
Standard deviation at 15.31% is much higher than the category average of 6.94%, indicating higher volatility

Market Cap Weightage

This data is not provided as the fund is an FOF investing in an ETF. The market cap breakdown of the underlying Bharat 22 ETF is not given.

Investor Profile Suitability

This fund is suitable for investors who:

Are looking to invest in select public sector undertakings (PSUs) as per the S&P BSE Bharat 22 Index
Have a high risk appetite and are comfortable with a concentrated portfolio
Want to invest in the Bharat 22 theme in a cost-effective manner, as the direct plan has a very low expense ratio of 0.09%
Have a long investment horizon to ride out the higher volatility

It may not be suitable for investors who:

Prefer a diversified portfolio across sectors
Have a low to medium risk profile
Are not aligned with the Bharat 22 theme
Have a short investment timeframe

In summary, the ICICI Prudential Bharat 22 FOF provides an easy and low-cost way for investors to take exposure to the Bharat 22 ETF and its underlying PSU stocks. However, the high portfolio concentration leads to higher risk and volatility, so it is more suitable for aggressive investors with a long-term view who are bullish on the PSU theme. More conservative investors may prefer diversified equity funds.

Risk Profile Analysis

The fund likely has a HIGH risk profile due to the following factors:

As an equity fund investing in a thematic ETF, it has a concentrated portfolio leading to higher risk
The underlying Bharat 22 ETF has high concentration in the top 10 holdings, increasing portfolio risk
Standard deviation of 15.31% is much higher than the category average of 6.94%, indicating greater volatility and risk compared to peers

While the fund has delivered superior risk-adjusted returns (alpha), investors should be aware of and comfortable with the high risk profile before investing.

Scheme Information

Fund Type: Open-ended Fund of Funds (FOF) scheme
Category: FoFs – Domestic
Investment Objective: To generate returns by investing in units of BHARAT 22 ETF
Benchmark: S&P BSE Bharat 22 Index (100%)
Inception Date: June 29, 2018
Fund Manager: Nishit Patel, Priya Shridhar, Ajaykumar Solanki
Expense Ratio: 0.09% (very low)
Exit Load: 0%
Minimum Investment: Rs. 5,000 lump sum, Rs. 1,000 SIP
Assets Under Management (AUM): Rs. 886.1 crores (as of Feb 29, 2024)

AMC Profile and AUM

ICICI Prudential Asset Management Company Limited is the fund house managing this scheme. Key points:

Established player and one of the largest asset managers in India
Joint venture between ICICI Bank and Prudential Plc (UK)
Wide variety of funds across asset classes catering to different risk profiles and investment goals
No major corruption charges or governance issues reported
Total assets under management (AUM) of Rs. 15,736.57 crores as of the report date (including this and other schemes)

The fund house has a strong reputation and track record, providing comfort to investors.

In summary, the ICICI Prudential Bharat 22 FOF has a high risk profile given the concentrated nature of its underlying portfolio. However, it has delivered category-beating returns over 6 month to 5 year periods, has a very low expense ratio of 0.09%, and is managed by a reputed fund house with a large AUM base.

Aggressive investors looking for PSU exposure and willing to take on higher risk for potentially higher returns can consider this fund for their portfolio. More conservative investors should assess their risk appetite carefully before investing.