India's Value Investing Pioneer Embraces Growth

A Decade of Transformation

The ICICI Prudential Value Discovery Fund (IPVDF), India’s largest value mutual fund scheme, recently celebrated its 20th anniversary. Over the years, the fund has undergone a significant transformation, evolving from a small-cap-focused value fund to a large-cap-oriented one. This shift, driven by market dynamics and changing investment philosophies, has not deterred the fund’s performance.

A Consistent Performer

Since its inception, IPVDF has consistently outperformed its benchmark and delivered impressive returns. A Rs 10 lakh investment at launch would have grown to over Rs 4.5 crore by July 2024, and a monthly SIP of Rs 10,000 would have accumulated to Rs 2.3 crore. These figures highlight the fund’s ability to generate substantial wealth for its investors.

A Shift in Investment Strategy

Initially, IPVDF focused on identifying undervalued stocks in the small-cap space. However, as the fund grew in size, it became increasingly challenging to invest large sums in smaller companies without significantly impacting their stock prices. This led to a gradual shift towards larger-cap stocks, which offer greater liquidity and diversification.

A Value-Growth Approach

Despite the shift in focus, the fund’s underlying investment philosophy remains rooted in value investing. The fund managers continue to seek out companies with strong fundamentals and attractive valuations. However, they have also incorporated elements of growth investing into their strategy. This approach, which combines value and growth, has proven to be effective in various market conditions.

A Proven Track Record

The fund’s success can be attributed to the consistent leadership of its fund managers, Sankaran Naren and Dharmesh Kakkad. Naren, who has been associated with the fund since its launch, has demonstrated exceptional skill in identifying undervalued stocks and managing the fund’s portfolio. Kakkad, as the co-manager, has played a crucial role in supporting Naren and contributing to the fund’s performance.

A Bright Future Ahead

As IPVDF enters its third decade, the fund’s future looks promising. The fund’s proven track record, coupled with the experienced leadership of its fund managers, positions it well to continue delivering strong returns. While the market landscape may evolve, the fund’s commitment to value investing and its ability to adapt to changing conditions make it a compelling investment option for investors seeking long-term capital appreciation.