The Analyst Rating does not express a view on a given asset class or peer group; rather, it seeks to evaluate each strategy and associated vehicle within the context of an appropriate benchmark and peer group.
The analysts delve deeply into three pillars: process, people and parent – referred to as the 3Ps. Since that forms the spine of our research approach, here is a look at which pillars got downgraded in 2022.
The names of the funds are linked to a brief analyst note. Over there you will be able to see the overall Morningstar Analyst Rating for the respective fund.
- ICICI Prudential Large & Mid Cap by senior analyst Nehal Meshram
- Downgrade: Process Pillar (Above Average to Average)
- Downgrade: People Pillar (Above Average to Average)
Chief Investment Officer Sankaran Naren and Prakash Goel previously co-managed the fund. Parag Thakkar took over the reins in June 2021. In November 2021, Naren relinquished his responsibilities on this fund and Parag managed it by himself. In June 2022 Parag quit the fund house and Ihab Dalwai was appointed as the lead manager of the fund.
Ihab is associated with the fund house since April 2011 as a research analyst who gradually moved into the fund management role. He currently co-manages ICICI Prudential Multi Asset and ICICI Prudential Balanced Advantage with Naren and also serves as the lead manager of ICICI Prudential Infrastructure.
Though Ihab is well engrained with ICICI Prudential's philosophy and further enhanced his skills under Naren, he doesn't have a strong long-term track record of handling the funds on his own. Now that Ihab will be managing ICICI Prudential Large and Mid cap Fund independently, which also has about 30-40% allocation to mid caps, it warrants a cautious approach. Ihab does not have experience in managing mid-cap funds and the success of this strategy depends on the portfolio manager’s ability to make sound investment decisions in large-cap and mid-cap stocks and adapt to market developments.
- UTI Mastershare Unit by senior analyst Nehal Meshram
- Downgrade: People Pillar (Above Average to Average)
Karthikraj Lakshmanan is now the lead on this strategy following the retirement of long-time lead manager Swati Kulkarni at the end of CY22. Although Lakshmanan has some relevant experience and has overseen a comparable strategy in his previous stint, his track record is not very long and performance of the funds that he managed appears to be mixed. Hence, we have taken a cautious stance to accurately reflect our current conviction.
Lakshmikanth Reddy exited in 2021 after managing this fund for over five years. Consequently, this led to the changes in the portfolio as the new manager adapted it to his style. Venkatesh Sanjeevi has managed a predominantly large-cap fund earlier and this fund invests a minimum of 35% of assets in mid-cap stocks. Hence, we found it prudent to observe his capabilities on the mid-cap side over the long term before building conviction.
- Franklin India Focused Equity by associate director Himanshu Srivastava
- Downgrade: Process Pillar (Above Average to Average)
- Downgrade: People Pillar (Above Average to Average)
Roshi Jain exited in the last quarter of CY21. An old hand at the fund house, she was managing the fund since 2014. This fund is aggressive in nature; a high conviction strategy with relatively enhanced risk. So we would like to observe the new manager’s style, the changes he brings about in the portfolio, and his executional capabilities before building conviction.
- Franklin India Bluechip by associate director Himanshu Srivastava
- Downgrade: Process Pillar (Above Average to Average)
- Downgrade: People Pillar (Above Average to Average)
Roshi Jain exited in the last quarter of CY21. An old hand at the fund house, she took over this fund in 2019 from Anand Radhakrishnan. Venkatesh Sanjeevi has taken over now. His investment style is very different. In the past, this fund has gone through a rather prolonged rough patch too. Therefore, it was prudent to evaluate these changes and manager's execution capabilities over time before building confidence.
- IDFC Bond Medium Term by associate director Himanshu Srivastava
- Downgrade: People Pillar (High to Above Average)
The fixed-income team at IDFC Mutual Fund has limited experience when it comes to investing in the lower credit segment. This an area where there is scope for improvement and expertise needs to be built up. This would enhance the team’s presence in medium duration and credit risk categories, where taking credit bets is a part of the strategy. This led us to lower the People Pillar.
- HDFC Flexi Cap by associate director Himanshu Srivastava
- Downgrade: People Pillar (High to Above Average)
Prashant Jain moved out of the fund house in 2022, and Roshi Jain now manages the fund. While Roshi doesn’t match Prashant’s experience and consistency with the fund, she is a very experienced portfolio manager. The rating is simply a reflection of her relatively lesser experience than Prashant, and the fact that we would like to see more of her work, and better stability within the equity investment team.
- HDFC Top 100 by associate director Himanshu Srivastava
- Downgrade: Process Pillar (Above Average to Average)
- Downgrade: People Pillar (High to Above Average)
Rahul Jain replaces Prashant Jain as the lead manager. His investment style differs from that of Prashant, as he tilts towards growth and valuation consciousness. This will lead to a change in the investment style of the fund and portfolio framework.
The fixed income team is on the leaner side. There is scope for expansion, particularly in the active duration space and credit research front. There is a lot riding on the two lead managers - Shobhit Mehrotra and Anil Bamboli. Further expansion could be an added advantage for the team, help in rationalising their workload and make the team future ready.
- HDFC Small Cap Fund by senior analyst Kavitha Krishnan
- Downgrade: People Pillar (High to Above Average)
Complete list of fund analyst reports