ICICI Prudential Long Term Plan - Premium Growth Option for Regular Earnings
Income funds are one of the mutual funds which invest in a diverse portfolio with the aim of earning returns through the dividends and interest payments. For this purpose the investments are made into high dividend earning company stocks (Preferred & Common), bonds, REITS (Real Estate Investment Trusts) etc. While most of the mutual funds are known for their diversification, the profile is limited to the stocks of diverse company stocks. However, Income funds take the concept of diversification to a new level by not only investing across different stocks but also diversifying the type of investments made, for e.g., bonds.
The prices of stocks and bonds show a dichotomy where when the prices of stocks go up, the process of bonds come down and vice versa. Since most of the Income funds invest in both stocks and bonds, it provides a hedge against any of the market vagaries to ensure that the fund performs well and provides regular income. Any one investing into the income funds need to understand three aspects about them before investing – The risk tolerance of the fund, the expense level and the tax efficiency. Not potential all income funds provide regular dividends, but scheduled special payments at regular intervals. Reviewing the prospectus of any income fund before investing would help to understand the specifics.
ICICI Prudential Long Term Plan - Premium Growth Option - an Overview
ICICI Prudential Long term plan – Premium growth option is an Income fund which was launched on 04-05-2009. The Benchmark for comparing the performance of the fund is CRISIL composite bond index. The minimum investment that needs to be made in this Income fund is Rs.1000000 and the minimum top is Rs 1000. It is a high investment fund focused on maintaining a balance between safety, yield and liquidity. The investments are made in diverse portfolios which includes not only various stock options but also different money instruments.
The portfolio is diverse for ICICI Prudential Long Term Plan – Premium Growth Option Fund. Major share belongs to the Government securities with an investment of nearly 11.15% of the corpus. Nearly 42% of the investment is made into interest earning options of central government loans. This 42% of the investment is made into 7 diverse central government loans which provide a hedge against any of the loans turning bad. Tata Steel Ltd has the highest investments among the investments made into company stocks with an investment of 3.88%. The other 45% of the investments are made into diverse money and stick options.
ICICI Prudential Long Term Plan - Premium Growth Option-Performance
The performance and the returns earned from the ICICI Prudential Long Term Plan-Premium Growth Option Fund have been better than the average performance recorded by the category of the Income Funds. Five year returns are a good way of understanding the consistency of the returns earned from a particular mutual fund.
Source: Swaraj Wealth Research
The five year performance of the fund provides returns of 11.17% which is very high when compared to the average performance of the category which is 7.63%. The one year return of the fund is also higher at 6.55% in comparison to the category’s 4.59%.
Apart from measuring the year term returns, the rolling returns are also a good measure of understanding the performance of a fund over a period of time.
Source: Swaraj Wealth Research
The last 3 years rolling returns (from the period April 2015-April 2018) of the ICICI Prudential Long Term Plan is 9.05%. This is higher than the performance of the category during the same period. The rolling returns of the category are 6.70%. The performance of the fund has been consistently better than that of the category across different 3-year rolling periods dating as far as 2013.