India is known as the hub of service industry. But along with this, the manufacturing industry is also growing rapidly in the country and contributes 28% to the country’s GVA (Gross Value Added). The manufacturing theme has several sectors that are poised to grow rapidly in the coming years, including automobiles, defence, mining, capital goods, railways, textiles, chemicals, petroleum and gas.
India’s rapid urbanization and rising incomes of people mean that housing and infrastructure will be in demand in the coming days. If seen globally, many countries are reducing investment in the energy sector, which India is sure to benefit from. Government measures for import substitution and strong promotion of manufacturing like Make in India, Performance Linked Incentive (PLI), momentum for multimodal logistics, completion of expressways and highways across the country, defense exports etc. Ready to take the theme to the fore. It can be said that the companies are well positioned for strong growth.
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As an investor, it is best to go the mutual fund route and especially considering ICICI Prudential Manufacturing Fund’s great track record, it becomes even more appropriate. ICICI Prudential Manufacturing Fund has consistently delivered good returns over the last five years since its inception in October 2018.
On a one-, three- and five-year basis, the fund has returned 35.3%, 34.7% and 19.7% respectively, trailing the S&P BSE India Manufacturing TRI by 2.6 to 9.6 percentage points. These returns are among the best among equity funds in all categories. ICICI Prudential Manufacturing Fund has given a strong 25.3% in SIP returns (XIRR) over the last five years.
Consistency in returns also works in favor of the fund. This is also confirmed by taking the rolling returns of three years in the last five years. On a three-year basis from October 2018 to October 2023, ICICI Prudential Manufacturing has returned an average of 24.6%. Further, the fund has returned 93.1% of the time, more than about 18% on a three-year rolling basis, which shows how stable the scheme is.
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Statistically, when the market is bullish, this fund outperforms the benchmark. When the market falls, it falls far short of the benchmark. The fund is investing in a cross-section of the manufacturing sector with investments in both cyclical and defensive sectors. ICICI Prudential Manufacturing Fund follows a blended investment approach that combines both value and growth styles. Currently, the fund is more focused on auto ancillaries, capital goods and cement and less on consumer non-durables, metals and mining and oil and gas compared to the benchmark index. It is neutral on pharma and healthcare. The weightage in the sector is taken with a balanced view and never excessive. ICICI Prudential Manufacturing Fund can be another good investment in your portfolio as a diversification agent.