Top MFs: ICICI Prudential Smallcap Fund

Objective

ICICI Prudential Smallcap Fund is open-ended Small Cap Equity scheme which belongs to ICICI Prudential Mutual Fund House. The scheme seeks to generate capital appreciation by predominantly investing in equity and equity related securities of small cap stocks.

Fund Highlights

The fund was launched in Oct, 2007.

ICICI Prudential Smallcap Fund has ₹3,450 Crores worth of assets under management (AUM) as on 31/12/2021 and is medium-sized fund of its category.

The fund has an expense ratio of 0.7%, which is close to what most other Small Cap funds charge.

Fund attract an exit load of 1% if redeemed upto 1 year

Minimum investment required is Rs 5000 and minimum additional investment is Rs 1000. Minimum SIP investment is Rs 100.

It is benchmarked against NIFTY Smallcap 250 Total Return Index.

Returns

ICICI Prudential Smallcap Fund Direct Plan-Growth returns of last 1-year are 60.73%. Since launch, it has delivered 18.13% average annual returns. The fund has doubled the money invested in it every 2 yrs.

Its trailing returns over different time periods are: 68.44% (1yr), 29.45% (3yr), 18.54% (5yr) and 12.03% (since launch). Whereas, Category returns for the same time duration are: 64.03% (1yr), 25.49% (3yr) and 18.29% (5yr).

Sector and stock wise exposure

The fund has the majority of its money invested in Services, Construction, Technology, Healthcare, Financial sectors. It has taken less exposure in Services, Construction sectors compared to other funds in the category.

The fund's top 5 holdings are in V-Mart Retail Ltd., Kei Industries Ltd., KPIT Technologies Ltd., INOX Leisure Ltd., Jamna Auto Inds. Ltd..

Tax Implications

1. Gains are taxed at a rate of 15% (Short-term Capital Gain Tax - STCG) if units are redeemed within 1 year of investment.

2. For units redeemed after 1 year of investment, gains of upto Rs. 1 lakh accruing from those units in a financial year shall be exempted from tax.

3. Gains of more than Rs. 1 lakh will be taxed at a rate of 10% (Long-term Capital Gain Tax - LTCG).

4. For Dividend Distribution Tax, the dividend income from this fund will get added to the income of an investor and taxed according to his/her respective tax slabs.

5. Also, for dividend income in excess of Rs 5,000 in a financial year; the fund house shall deduct a TDS of 10% on such income.

Fund manager

The ICICI Prudential Smallcap Fund is managed by Harish Bihani (Since Nov 05, 2018) and Priyanka Khandelwal (Since Jun 16, 2017).

Expert Comment

The scheme seeks to generate capital appreciation by predominantly investing in equity and equity related securities of small cap stocks. The scheme's ability to deliver returns consistently is in-line with most funds of its category. Its ability to control losses in a falling market is above average. The suggested investment horizon of investing into ICICI Prudential Smallcap Fund is >3 years. The suggested investment horizon is the minimum time required for holding investments in the fund to reduce its downside risk and ensure that the returns become more predictable.