ICICI Bluechip fund is a largecap fund which would need to invest alteast 80% of its fund in the top 100 listed companies. In this blog we are going to compare this fund with Nifty 50 instead of Nifty 100. Because Nifty 50 invests only the top 50 instead of 100, it is generally believed to be more stable in terms of volatility. Also, a Nifty 50 investment through mutual fund would result in investing in a passive fund for which the expense ratio is lower than that of an actively managed fund i.e. like the ICICI blue chip fund. Now let us examine both factors of volatility and returns for Nifty 50 and ICICI bluechip fund.
Volatility: The question of downside protection is best evaluated during times of a crash (like Covid) or the current scenario where there has been correction / market slowdown. From its high of 12,271 created in December 2019, Nifty fell to 7,610 in March 2020, that is a downside of 38%. At the same time ICICI bluechip fell from its high of 47.4 in December 2019 to 30.1 in March 2020, that is a downside of around 36%. In the current scenario, Nifty 50 has dropped by ~8% from its high in September 2024 to Feb 2025 whereas ICICI bluechip fund dropped by ~12%.
Returns: For comparing returns let us take returns of UTI Nifty 50 Direct fund and compare it with that of ICICI Bluechip fund. Both these returns would be after all expenses including the higher expense ratio of ICICI Bluechip. The methodology I would use to compare returns are to see what if we had started SIP in both these funds at the start of the year from 2014 to 2020 and see returns given or corpus created each subsequent month upto January 2025. For example, if you started SIP in January 2014, we would see the corpus value of both funds at the start of the month from February 2014 to January 2025 i.e. we would have 120 data points (accumulated corpus as on that month) for which we would see which fund gave higher returns. Similarly for SIP started in 2015 we would have 108 data points, SIP started in 2016 would have 96 data points and so on.
From the data above it seems like a SIP in ICICI results in a higher corpus on average 65 to 70% times. Even if SIPs were started in the 2017 and 2018 it was 50:50 and for other years ICICI fared much better. Now the above data only indicated number of months in which corpus value of which scheme was higher, but did not look at the extent of returns of the value by which one fund beat another.
In this metric, ICICI seems to get ahead of UTI Nifty 50. In the months where UTI’s accumulated corpus surges ahead of ICICI, it cannot get ahead by more than 3 to 4%; however ICICI’s corpus surges ahead by over 15% as well, of course most of this has happened in the bull run upto 2024. Similarly the average returns of ICICI over UTI Nifty 50 in the months that it is beating UTI are much higher than the other way around. To summarize:
1) In terms of volatility of downside protection there is not much to choose, may be Nifty 50 is just slightly better
2) Consistently beating returns: ICICI over the past 10 years has performed 65 to 70% times better than Nifty
3) Overall Returns: ICICI has provided better returns and would have resulted in a larger corpus whenever it was getting ahead of UTI Nifty 50. Also, would be interesting to see, now that ICICI’s accumulated corpus has gone ahead of UTI Nifty 50 by more than 14% as of 2024, can UTI Nifty 50 surge ahead in the next few years to ever go ahead of ICICI for investors who started SIPs before 2020.
Note: This blog is not a recommendation to invest in any of the funds mentioned - ICICI Bluechip, Nifty 50 or UTI Nifty 50 Index fund.
Kommentare