WF: What is the average holding period of investors in this scheme: is it just above the mandatory 3-year lock-in or are investors taking a longer-term view beyond the lock-in? Will you be able to share data on how this number has moved in recent years for this scheme?

Naren: While the lock in period for the Tax Saving scheme is for three years, the product has created long term wealth for its investors. On a ten-year basis, the scheme has been the one of the top performing scheme among its category peers and has outperformed the benchmark as well. Equity Linked Savings Scheme (ELSS) has been largely promoted by the mutual fund industry for its twin benefits of tax saving and long term wealth creation. Therefore, over the years, through the investors in ICICI Prudential Long Term Equity Fund (Tax Saving), we have seen that the investment duration is well over three years mandatory lock-in period.

WF: Do you follow a multi-cap strategy in this scheme? What is the typical allocation across market cap sizes and has this been changing dynamically?

Naren: Yes, we follow a multi-cap strategy. The scheme is flexible in terms of deciding the portfolio allocation and currently our portfolio has a 70:30 ratio in terms of exposure to large-cap: mid & small cap companies and the historical trend has largely been on similar lines. (Data as on January 2019)

WF: Which are the sectors you are currently over and underweight on?

Naren: We are overweight Power, Pharma & healthcare, Auto, Metals & Mining and Telecom and underweight Banks, Consumer Durables, IT, Oil & Gas and Petroleum. Also, we are benchmark cognizant but not benchmark aligned. Our sector weightage vs. benchmark will be within a range of 5% of the benchmark or 50% of the benchmark weightage, whichever is higher.

Current Portfolio Positioning

Data as of January 31, 2018; The stock(s)/sector(s) mentioned in this slide do not constitute any recommendation and ICICI Prudential Mutual Fund may or may not have any future position in this stock(s). Past performance may or may not be sustained in the future. The portfolio of the scheme is subject to changes within the provisions of the Scheme Information document of the Scheme.

WF: You have highlighted pharma and healthcare as one of your key overweights: is this driven only by the secular story or are there any other near to medium term catalysts too that are driving your optimism here?

Naren: We are overweight pharma and healthcare sector, as we find valuations to be at attractive levels in several names given its outlook over the next 2-3 years. The sector as a whole is expected to be benefited from Government’s focus on healthcare and further, the recent underperformance of pharma stocks makes a strong case for investing now in this sector. Rising income levels, increased health awareness, improvement in treatment technologies, increasing penetration of health insurance has made the healthcare sector as one of the fastest growing sectors in the country. The increased awareness about healthcare, wellness, and preventive diagnostics is expected to fuel a new wave of growth in the sector.

WF: Your scheme’s performance has bounced back over the last year, by managing to protect capital better than others in a tough market. What are strategies that worked well in this context?

Naren: ICICI Prudential Long-Term Equity Fund (Tax Saving) has been one of the best performing scheme in 1 and 10 years time horizon when compared with the category peers and the benchmark index. Our select exposure to banks & finance, software, industrial products, metals & mining and consumer non-durables has worked well for the scheme over the last one year. Moreover, the scheme is around 20 years old and we have been delivering good investment experience consistently for our investors in terms of 5-year rolling returns. We believe the investment outcome is a function of the process and investing philosophy followed by us.

WF: Looking ahead at 2019, would you be looking more at protecting downside in what may continue to be a choppy ride or at capturing upsides of what may be a promising bull market?

Naren: Historically election years tend to be volatile and 2019 is likely to be no different. We are of the view that 2019 is going to about individual stock picking, wherein fundamentally strong companies available at attractive valuations, will be looked at. Given the nature of the scheme and the mandatory lock-in period, we look to invest into undervalued stocks with relatively long term investment horizon. Therefore, near term volatility will be looked at as interesting stock picking opportunities, such that investors can benefit over the long term.

Wealth Creation Journey since Inception

Data Source: MFI; Data as of January 31, 2019. Returns in Rupee terms. Past performance may or may not be sustained in future. The scheme is benchmarked to the total return variant of the index. Information only for distributors and financial advisors of ICICI Prudential Mutual Fund.

Consistent Outperformance across various time periods

Data Source: MFI; Data as of January 31, 2019. Returns in CAGR % terms. Past performance may or may not be sustained in future. It is necessary to consult tax/financial advisor before making investments in mutual funds. Information only for distributors and financial advisors of ICICI Prudential Mutual Fund. The Scheme is benchmarked to the Total Return Variant of the Index.

Riskometer & Disclaimer

Mutual Fund investments are subject to market risks, read all scheme related documents carefully.

The information is only for distributors and Advisors of ICICI Prudential AMC and the same should not be circulated to investors/prospective investors. All data/information used in the preparation of this communication is specific to a time and may or may not be relevant in future post issuance of this communication. ICICI Prudential Asset Management Company Limited (the AMC) takes no responsibility of updating any data/information in this communication from time to time. The AMC (including its affiliates), ICICI Prudential Mutual Fund (the Fund), ICICI Prudential Trust Limited (the Trust) and any of its officers, directors, personnel and employees, shall not liable for any loss, damage of any nature, including but not limited to direct, indirect, punitive, special, exemplary, consequential, as also any loss of profit in any way arising from the use of this communication in any manner.

Nothing contained in this communication shall be construed to be an investment advice or an assurance of the benefits of investing in the any of the Schemes of the Fund. Recipient alone shall be fully responsible for any decision taken on the basis of this document.

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