This Commodities Mutual Fund generated 70% returns in 1 year
Sector mutual funds are high risk as these would perform well in specific market cycles. This commodity mutual fund has beaten all sector mutual funds and has generated 2nd largest returns after another Infra fund. This commodity fund invests in equity and related instruments of companies engaged in commodity and commodity related sectors. In this article we would discuss about the ICICI Commodities, Mutual Fund that generated 70% returns in 1 year
We did cover Quant Small cap Fund review earlier (If you have missed it, you can read it) that generated very high returns in the last 1 year.
ICICI Prudential Commodities Fund โ Investment objective and Scheme info
Investment objective: This mutual fund scheme aims to generate long-term capital appreciation by creating a portfolio that is invested predominantly in Equity and Equity related securities of companies engaged in commodity and commodity related sectors.
- Since this fund invests in commodity and related sectors, it is classified as a thematic mutual fund.
- One can invest Rs 5,000 lump sum in this scheme.
- Investors who wish to invest through SIP can invest a minimum of Rs 100 per month for 6 months.
- There is no entry load.
- There is an exit load of 1% if redeemed within 90 days. Beyond 90 days, no exit load.
- Current AUM of this fund are Rs 701 Crores.
- The current expense ratio of this fund is 1.05%.
- Since this is thematic fund, it is classified as high-risk mutual fund.
ICICI Prudential Commodities Fund โ Performance
Here are the performance metrics.
- This fund gave 70% returns in the last 1 year.
- This fund generated 52% annualized return since inception from Oct-2019 to till date.
- If you would have invested Rs 1 Lakh in this fund, one year back, your investment would have grown to Rs 1.7 Lakhs by now.
- If you would have invested Rs 10,000 per month through SIP in this fund, your investment would have been Rs 1.2 Lakhs (10,000 x 12 months) and the investment value would have grown to Rs 1.4 Lakhs.
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Who is the fund manager?
Mr. Sankaran Naren was the fund manager between Oct-2019 to 8-Jul-20.
Mr. Lalit Kumar was made as fund manager from 9-Jul-2020 onwards. His qualification is PGDM (IIM) and B. Tech in Electrical Engineering (IIT). He was working with East Bridge Advisors Pvt. Ltd, Nomura Financial Advisory & Securities, Merrill Lynch and Cypress Semiconductors and later joined ICICI Prudential Mutual Fund.
How is the stock portfolio constructed?
Here are the current portfolio details.
1) It invests 92% in equity and related instruments of commodity segment.
2) It has 8% in cash and related instruments.
3) Currently it owns 27 stocks, out of which 60% of the portfolio is invested in top-10 stocks. Its top 5 stocks contribute to 35% of its portfolio value.
Sector / Stocks where ICICI Pru Commodities Fund is investing
Here is the sector / stock info.
1) It is investing in the following major sectors which contributes to 80% of its entire portfolio.
- Metals (47%)
- Construction (23%)
- Chemicals (10%)
- Energy (10%)
2) Below are the top 10 stocks along with portfolio %age
- Hindalco (10%)
- Vedanta (6.5%)
- Ambuja Cement (6.3%)
- Tata Steel (6.3%)
- Jindal Stainless Steel (5.5%)
- Grasim Industries (5.3%)
- Godawari Power and Ispat (7.4%)
- PI Industries (5.2%)
- Hindustan Copper (4.9%)
- Hindustan Oil Exploration (5%)
Interesting things about ICICI Prudential Commodities Fund
Here are some pointers to note.
1) This fund is consumption based thematic fund. During stock market recovery in April to Jun-20 quarter, this fund was performing in line with the benchmark.
2) There is change in fund manager from Jun-2020 onwards and we could see superior performance from then onwards.
3) The abnormal performance started from Mar-2021 to Oct-2021. This is the time where we could see a significant jump in the metal stocks and other sector stocks too.
4) This fundโs 80% of investments is in Metals, Energy, Construction and Chemical stocks. These sectors have outperformed in the recent past.
5) Metal stocks were rising due to various reasons like commodities super cycle and demand-supply gap. There is almost 9 out of 10 metal stocks that has increased between 20% to 70% during the beginning of 2021. Deep production cuts in China and restrictions on steel exports are also one of the reasons for the increase in the steel prices. This rally is followed by cement sector (since there is a correlation between two).
All these factors contributed to the superior performance of the fund.
Should you invest in ICICI Pru Commodities Fund?
ICICI Prudential Commodities is a thematic mutual fund where it majorly invests in Metals, Energy, Cement, Construction and Chemicals. We could see a rally in metal stocks during the first half of 2021 which helped this fund to generate abnormal high returns. We are already seeing correction in this segment in the last 6-9 months. However, for medium to long term, this segment still looks promising and positive. While the entire stock market is taking correction in the last few months, this theme is recovering at a faster pace. High risk investors can invest in such funds when there is a correction of 10% to 15% in the coming months.
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Quite interesting and informative.I am tempted to invest in it.
Good One Suresh, Metals will be a 15/20% CAGR story for next 2-3 yrs. If not in this MF people can make a small case basket of Metals and Aluminium stocks which will give good returns.
Pls also cover on the SWP funds and how one can generate monthly return of 40/50K out of this while the remaining investments can still grow at 8/12 % atleast.