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2 Lakhs to 92 Lakhs in 20 Years : How This Multi Asset Fund Generated staggering 21% CAGR

Updated: Apr 29, 2023




Imagine investing 2 lakh rupees in a mutual fund 20 years ago and watching it grow into a almost 1Crore today. It might seem too good to be true, but with ICICI Prudential Multi Asset Fund, it's a reality. This fund has consistently outperformed its peers over the past two decades, generating an impressive 21% compounded annual growth rate (CAGR). But what does that mean for investors who got in early? Well, if you had invested 2 lakh rupees in this fund 20 years ago, your investment would be worth a staggering 92 lakhs today! That's right - a single investment 20 years ago has multiplied nearly 46 times, thanks to the consistent performance of the ICICI Prudential Multi Asset Fund. That too without too much of volatility. At the same time, Nifty 50 TRI compounded 2 lakhs into 46 lakhs in the same duration. That means, ICICI Prudential Multi Asset Fund returned almost twice to that of Nifty. So, what's the secret behind this fund's success? In this blog post, we'll explore the strategies and factors that have led to the fund's exceptional performance over the years, and why it could be a smart choice for long-term investors.


Lump sum return of Nifty 50 vs ICICI Prudential Multi Asset Fund
Lump sum return of Nifty 50 vs ICICI Prudential Multi Asset Fund

What are Multi Asset Funds

Mutual funds are a popular investment option for investors looking to diversify their portfolio across different asset classes such as equities, debt, and commodities. One such class of mutual funds which invests across multiple asset classes is called Multi-Asset Mutual Funds.

These funds invest in multiple asset classes, such as equities, debt, fixed income, commodities, and sometimes even alternative investments like real estate or gold. The objective of multi-asset mutual funds is to provide investors with a diversified investment portfolio that can potentially deliver superior risk-adjusted returns over the long term.

One such multi asset mutual fund that has consistently outperformed its peers and benchmark over the past two decades is the ICICI Prudential Multi Asset Fund.


Investment Philosophy


The ICICI Prudential Multi Asset Fund is managed with the objective of generating long-term capital appreciation by investing in a diversified portfolio of equity, debt, and gold instruments. The fund aims to provide investors with a balanced portfolio that combines the growth potential of equities with the stability of debt and the diversification/natural hedging benefits of gold.


Asset Allocation Strategy


The fund's asset allocation strategy is dynamic and flexible, with the ability to adjust the portfolio's asset allocation based on changing market conditions. The fund's asset allocation is determined by a combination of top-down and bottom-up approaches.


Equity Allocation

The fund's equity allocation is based on a bottom-up approach, where the fund manager selects individual stocks based on their fundamentals, growth prospects, and valuation. The fund manager aims to create a portfolio of high-quality, growth-oriented companies with strong earnings potential.


Debt Allocation

The fund's debt allocation is based on a top-down approach, where the fund manager selects debt instruments based on the macroeconomic environment, interest rate outlook, and credit quality. The fund manager aims to invest in high-quality debt instruments that provide stable returns while managing credit risk.


Gold Allocation

The fund's gold allocation is based on a top-down approach, where the fund manager selects gold instruments based on the macroeconomic environment, inflation outlook, and currency movements. The fund manager aims to invest in gold instruments that provide diversification benefits and act as a hedge against inflation and currency risk.

below chart depicts the asset allocation of the fund as of March 31,2023.


Asset Allocation of ICICI Prudential Multi Asset Fund

ICICI Prudential Multi Asset Fund Asset Allocation as of 31, March, 2023


Fund Perfomance

Trailing returns

To understand the performance of the ICICI Prudential Multi Asset Fund, let's take a look at its trailing returns over different periods


As we can see from the above table, the fund has delivered impressive returns across all time frames. The fund has generated a CAGR of 21% in last 20 year period from April 1st 2003 to March 31,2023, making it one of the top performing multi asset funds in India. That means a lump sum investment of 2 lakh in 2003 is worth 92.6 lakhs as of March 31,2023 . Similarly, a monthly SIP of as low as 2000 is worth 73 lakhs today. You read it right. 73 Lakhs with a monthly SIP of just 2000 rupees.

Even during the last 1 year, where most of the equity mutual funds either returned negative returns or no returns, this fund gave 9% return thanks to its dynamic asset allocation and appreciation in other assets such as gold.


Rolling Returns

Apart from trailing returns, it is also important to analyze the rolling returns of the fund to understand its consistency over different time frames. The table below shows the rolling returns of the ICICI Prudential Multi Asset Fund over various periods in the last 20 years.


Rolling returns of ICICI Prudential Multi Asset Fund
Rolling returns of ICICI Prudential Multi Asset Fund

As we can see from the above table, the fund has consistently delivered positive rolling returns over all time frames. In any consecutive 5 years period, the fund never returned negative returns. In any 3 consecutive years, the fund returned 15 times positive returns and only 2 times small negative returns. these two instances fall under once in a decade events the first being the 2008 great financial crisis and second being the 2020 covid crash.

The ICICI Prudential Multi Asset Fund has performed well in both high and low market periods in the last 20 years.


Reasons for Consistent Performance

The ICICI Prudential Multi Asset Fund's consistent performance can be attributed to the following factors:

  1. Asset Allocation: The fund has a well-diversified portfolio across various asset classes such as equity, debt, and gold. The fund manager dynamically manages the asset allocation based on market conditions to optimize returns.

  2. Stock Selection: The fund manager focuses on selecting high-quality stocks with strong fundamentals and growth potential. This has helped the fund to generate alpha over its benchmark.

  3. Risk Management: The fund manager employs a disciplined risk management approach to minimize downside risk and preserve capital.

Summary

Multi Asset Funds provide great opportunity for investors to diversify their portfolio across multiple asset classes in a single mutual fund. ICICI Prudential Mutual fund provided extraordinary returns of 21% CAGR over the last 2 decades.It performed well across market cycles. During high market periods, the fund's equity allocation has helped generate higher returns, while during low market periods, the fund's debt and gold allocation have provided stability and downside protection. Investors with long term horizon should definitely consider investing in Multi Asset funds to add stability into their portfolio.




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