ICICI Prudential Dividend Yield Fund has been No. 1 or 2in its category consistently over the last 10 yrs, with a robust 53% 1 yr return and a healthy 16% CAGR over 10 yrs.
Mittul uses dividend yield and free cash flow yield as critical quality filters while at the same time not emphasizing too much only on dividend yield, which could otherwise lead him into dividend traps. Adynamic strategy, value orientation and a flexicap mindset have been keyperformance enablers for the fund.
Mittul currently favours power, banks, auto and pharma sectors – all of which he believes offer good value in a market that is becoming increasingly expensive.
The key challenge for a fund like this is not performance, but positioning. In a market where differentiation by size(large/mid/small), style (growth/value) and theme (manufacturing/services) are clearly understood, dividend yield as a category represents a challenge to easily bucket and fit into investor portfolios.
The fact that dividend yield as a filter automatically acts as a safety net in stock selection in an otherwise dynamically managed flexicap-type portfolio needs to be highlighted as a key differentiator.