Do you want to exit ICICI Pru Value Discovery Fund?

ICICI Pru Value Discovery Fund has recently announced a couple of changes. Do they hurt you or help you? Let’s find out.

One, it is going to merge the ICICI Pru Value Fund – Series 18 into itself. The Series 18 is a closed ended fund started in 2017.

I am not really clear about the reason here but that is what is happening.

Know that ICICI Pru Value Discovery will continue – the Series 18 fund will end after the merger.

The unitholders of both the funds have been given an option to exit any fund without any loads till May 17, 2021.

Two, the fund is also adding the option to write covered calls and create segregated portfolios. These are enabling provisions for now.

Read the full investor communication here.

Value oriented funds seem to be finding the writing covered call option attractive. Mostly because the value stocks may fail to move significantly in a shorter period and the call option premium acts as an additional income from the holding. (a simple version)

So, where does ICICI Pru Value Discovery stand?

Compared to other value funds, Value Discovery, helmed by Sankaran Naren himself, has not lived up to its promise (unless you set this as the expectation). Here are its rolling returns as on April 28, 2021

Unovest; Direct Plan data; Average is calculated as Median

The 7 year history may not be very valid here as it was operating as a midcap fund then. Read more.

Quantum Long term Equity Value Fund seems to have done better. See this rolling returns history as on April 28, 2021

Parag Parikh Flexi cap fund, with the push from its international holdings, has done even better.

So, what should be done?

Well, the fund has completed over 5 years in its new avatar as a Multicap fund. It is driven by S Naren, the CIO and someone known as one of the finest fund managers.

On the other side, the volatility (measured by Standard Deviation) has been higher (comparatively). The expense ratio is also the highest in the value category. Funds like Parag Parikh have trended much lower in expenses with a much smaller AUM.

So, what exactly is the value add with the fund?

Frankly, I am still looking for it.

Between you and me: Will you use the current opportunity to exit the fund?