ICICI Pru Asset Allocator Fund of Funds – A peek inside

ICICI Pru Asset Allocator Fund of funds invests dynamically in a mix of equity, bonds and gold. It is emerging in several shortlists and a top fund as per star ratings. Should you consider investing in this fund?

A large part of the mutual fund industry has been to bring FD and LIC investors into its fold. Products such as FMP or fixed maturity plan, tools such as SIP, strategies such as asset allocation funds are created to provide a familiar experience to these investors who can then later be graduated to other products.

ICICI Pru Asset Allocator Fund of funds aims to address a few issues for the investor –

1. Provide a better return experience (not the highest or the lowest, but somewhere in between)

2. It is done by using debt and gold along with equity to control the risk / volatility. It can go from 0 to 100 in equity as well as debt, while the max allocation to Gold is 50%. (Source – Scheme Information Document)

3. The fund invests in several equity and debt schemes offered by ICICI Pru MF itself. It takes the pain of category or scheme selection + allocation for the investor.

Does this make a compelling choice for a DIY conservative investor?

Let’s look at the numbers and compare with similar funds from ICICI Pru.

ICICI Pru Asset Allocator Fund of Funds vs Multi Asset Fund vs Balance Advantage Fund vs Nifty Index Fund

ICICI Pru Asset Allocator Fund of Funds – an asset allocation fund that invests dynamically in funds/ETFs of equity, bonds and gold. Decent performance at low risk.

1. The one year volatility is almost half of the Nifty 50 index fund.

2. Taxation as a debt fund; Long term after 3 years of holding

3. Currently (Aug 2022) has a lower allocation to equity funds – less than 30%.

Unovest – Rolling Returns analysis for ICICI Pru Asset Allocator Fund of Funds – Direct Plan

ICICI Pru Multi Asset Fund – a hybrid fund that invests in individual securities for equity, debt, gold (min 10% in each)

1. The one year volatility is similar to the Nifty 50 index fund.

2. Currently (Aug 2022), has Net equity at 60%.

3. Min 10% allocation to Gold has worked in favour in the last few years.

Unovest – Rolling Returns analysis for ICICI Pru Multi Asset Fund – Direct Plan

ICICI Pru Balance Advantage Fund – a hybrid fund that invests in individual securities of equity and debt dynamically based on a valuation model – maintains minimum 65% in Net Equity.

1. The one year volatility is almost half of the Nifty 50 index fund.

2. Currently (Aug 2022), has Net equity of 36%.

3. Taxation as an Equity Fund

Unovest – Rolling Returns analysis for ICICI Pru Balance Advantage Fund – Direct Plan

For comparison – ICICI Pru Nifty 50 Index Fund – which mirrors the Nifty 50 index.

Unovest – Rolling Returns analysis for ICICI Pru Nifty 50 Index Fund – Direct Plan

The Big Questions

1. If you are a conservative DIY investor, which of the above funds would you go for?

2. As a passive investor, are you better off with a Nifty 50 Index Fund for your equity allocation or do the hybrid funds offer better comfort?

3. As a moderate investor, is the Multi Asset Fund better vs the Balance Advantage?

4. If you are an aggressive investor, would you even consider any of the above?

Let’s convert this into a learning opportunity. Do share your thoughts and comments and questions.