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Equities – Wealth Creation Journey
Source: Morgan Stanley. QE – Quantitative Easing, EU – European Union, GDP – Gross Domestic Product, GST – Goods and Services Tax
Historically despite short term volatilities, equity markets have created wealth for investors over long term
CASE FOR
SMALLCAP
INVESTING
Benefits of Smallcap investing
FUTURE LEADERS
Fundamentally sound,
well managed small companies
may have the potential to become
future leaders (Largecaps)
P/E RE-RATING
Re-expand potential of
quality stocks in their
growth phase is relatively
high.
HIGH GROWTH POTENTIAL
Offers good growth prospects
as the companies are in
the early stage of their life cycle.
SHARE PRICES FOLLOW RE-RATING
Once re-rated, the companies are
fairly valued which may lead to
appreciation in share price
Wealth Creation Journey
The Smallcap segment maybe volatile in the short term, but in the long term the category has created wealth
Source: BSE. All data as of December 31, 2020. Smallcap Index considered is S&P BSE Smallcap Index. Past performance may or may not sustain in future. The performance figures pertain to the
Index and do not in any manner indicate the returns/performance of the Scheme.
Rs. 10 Lakhs
Rs. 34.9 Lakhs
5,00,000
15,00,000
25,00,000
35,00,000
Aug-0
5
May-07
Jan-0
9
Oct-10
Jun-12
Feb-14
Nov-15
Jul-
17
Mar-19
Dec-2
0
Value of Rs. 10 Lakhs invested in S&P BSE Smallcap Index
Multibagger Category
In the last 5 Years, out of the top 500 stocks listed,
Smallcap segment has created most of the multi-baggers
The universe considered Nifty 500 Index. Top 100 Companies by market cap are classified as Largecap, The next 101st-250th companies by market cap are classified as Midcap; 250 and beyond are considered as Smallcaps. Data is as of
December 31, 2020. Source: Capitaline. Returns generated are of the past 5 years and in absolute terms. Securities which are currently listed and were not listed 5 years ago are not considered. Past performance may or may not sustain in
future
52
2 0
15
67
2 1
11
82
1 0
16
0
20
40
60
80
100
1x-5x 5x-10x >10x Between 50-100% returns
No. of S
tocks
Largecap Companies Midcap Companies Smallcap Companies
Ample Opportunities
Owing to a relatively broader universe, the opportunity to identify quality stocks increases manifold
Total securities available
on NSE for trading: 3880
Mcap between Rs. 10,024 Crs and Rs.
33,508 Crs No. of Stocks: 150
Mcap > Rs. 33,508 Crs
No. of Stocks: 100
Mcap between Rs. 500 Crs and Rs. 8,626 Crs
No. of Stocks: 688
TOTAL STOCKS in the Smallcap category is 3550
The universe considered is all listed stocks on NSE. Top 100 Companies by market cap are classified as Largecap, The next 101st-250th companies by market cap are classified as Midcap; 250 and beyond are considered as Smallcaps. Data is
as of Dec 31, 2020. Source: Capitaline and NSE. Securities for which Marketcap data is not available are not considered. The above data consists of only actively traded securities on NSE. This is only for reference purpose.
Ample Opportunities
Smallcaps can explore a relatively wide range of sectors which remain undiscovered otherwise.
This further helps in reducing sector skewness
Unexplored
Unexplored
Less skewed
Largecap: Nifty 50 Index, Smallcap is Nifty Smallcap 100 Index, Data as of Dec 31, 2020. Source: NSE. The sectors mentioned in this slide do not constitute any recommendation and ICICI Prudential Mutual Fund may or may not have any
future position in this sectors..
Unexplored
Sector Smallcap Largecap
Financial Services 16.16% 38.79%
Construction 8.53% 2.61%
IT 13.46% 16.29%
Consumer Goods 12.50% 11.52%
Oil & Gas 1.17% 12.49%
Chemicals 5.27%
Industrial Manufacturing 5.68%
Healthcare Services 1.17%
Pharma 14.96% 3.61%
Fertilisers & Pesticides 3.66% 0.43%
Textiles 2.67%
Media & Entertainment 2.87%
Services 3.92% 0.59%
Cement & Cement Products 3.18% 2.15%
Automobile 0.80% 5.38%
Metals 1.37% 2.50%
Telecom 1.12% 2.03%
Power 0.77% 1.61%
Paper 0.74%
WHY
SMALLCAPS
NOW?
Current Smallcap Valuations
Source: NSE. Data as of December 31, 2020
The small-cap space has seen significant correction with current valuations close to the historic average.
This indicates that it is a good time to add smallcaps
2.6
1.0
1.4
1.8
2.2
2.6
Aug-1
7
Jun-18
Apr-19
Feb-20
Dec-2
0
Nifty Smallcap 250 Index P/BV
Average: 2.0
Current Smallcap Valuations
The correction in Smallcap space, has led to Marketcap divergence.
This indicates that it is time to add Smallcaps in a staggered manner
Top 100 indicates top 100 companies by market capitalization,101-250 indicates next 150 companies by market cap and above 250 indicates companies post the top 250 companies by market cap. Source : Edelweiss Research,
Data as of December 31, 2020
Share in the Overall Market Cap (%)
Index 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 Sep-20 Oct-20 Nov-20 Dec-20
Top-
10079 75 74 71 79 77 78 79 78 81 75 74 72 65 70 74.0 74.1 73.5 73.3
101-
25011 12 12 13 11 12 13 13 14 13 14 15 15 16 16 15.6 15.5 15.9 15.6
Above
25011 13 14 16 10 11 9 8 8 6 10 11 14 18 14 10.4 10.5 10.6 11.0
Recent Underperformance
Smallcaps have underperformed sharply since Jan-18; making a case for adding Smallcaps to the portfolio
Source: NSE India. Data as of December 31, 2020. Data in % terms. Returns mentioned are absolute returns. Past performance may or may not sustain in future. The performance figures pertain to the Index and do
not in any manner indicate the returns/performance of the Scheme.
30
50
70
90
110
130
Jan-1
8
May-18
Aug-1
8
Dec-1
8
Mar-1
9
Ju
l-19
Oct-19
Feb-20
May-20
Sep-20
Dec-2
0Index
Levels
Re
-based t
o 1
00
Nifty 50 Vs Nifty Smallcap 250 Index
Nifty 50 Nifty Smallcap 250
10.2% Returns
-5.8% Returns
Benign Interest Rates & Smallcaps
Source: RBI, BSE India, Data as of December 31, 2020. Smallcap Index considered is S&P BSE Smallcap Index. The performance figures pertain to the Index and do not in any manner indicate the returns/performance of the Scheme.
Low interest rates, create conducive environment for Smallcaps, as
the cost of capital – a key driver of profitability for small quality companies comes down
Repo Rate Movement Vs S&P BSE Smallcap Index
4
5
6
7
8
9
10
1,000
5,000
9,000
13,000
17,000
21,000
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
Repo R
ate (
%)
S&
P B
SE
Sm
allcap I
ndex
S&P BSE Smallcap Index Repo Rate
Smallcaps recover faster
Source: RBI, BSE India, Data as of December 31, 2020. Past performance may or may not sustain in future. The performance figures pertain to the Index and do not in any manner indicate the returns/performance of the Scheme.
Smallcaps have outperformed large caps in 7 out of 14 time periods by a significant margin post corrections.
Hence, post the recent corrections, the Smallcap category offers a good entry point
-70%
-20%
30%
80%
130%
FY
07
FY
08
FY
09
FY
10
FY
11
FY
12
FY
13
FY
14
FY
15
FY
16
FY
17
FY
18
FY
19
FY
20
Nifty Smallcap 100 Nifty 50
15
Presenting
ICICI Prudential Smallcap Fund
Big things come in
small packages
Why ICICI Prudential Smallcap Fund ?
Robust research &
screening process
Well Defined
Investment Strategy
& Portfolio Construct
Young and Agile:
AUM as on December 31,
2020 is Rs. 1,778.40 Crs
Robust Investment
Process
Young & Agile
YOUNG: TIMELINE FOR ICICI PRUDENTIAL SMALLCAP FUND AGILE
MAY 2018
ICICI Prudential Indo-
Asia Equity Fund gets
repositioned to ICICI
Prudential Smallcap
Fund post SEBI
scheme categorisation
Small fund size
enables the scheme
to better manoeuvre
across opportunities.
(AUM as on
December 31, 2020
is Rs. 1,778.40 Crs)
JULY 2018
Closure of Lump sum
investment:
Expectation of heightened
volatility & small cap
valuations which continued
to climb; prompted to
close lump sum subscription
under ICICI Prudential
Smallcap Fund
MARCH 2019
Opened the scheme for
lumpsum subscription
Post the correction in the
small-cap space,
valuations have become
reasonable & provides a
good opportunity to build
long term portfolio.
Research & Screening Process
The team of analysts provide the Fund Manager with their top picks and the same is reviewed by the fund manager.
Subsequently, weights are assigned. The small-cap universe of 250+ stocks is reduced to about 40-65 stocks following
the research and screening process. Filters used for the screening process is as follows
RoE – Return on Equity
Earnings growth potential
Leverage levels
Opportunity-size of the Sector
Corporate Governance
Valuations
Portfolio Construct & Strategy
The portfolio of the scheme is subject to changes within the provisions of the Scheme Information document of the scheme. Please refer to the SID for investment pattern, strategy and risk factors. The asset allocation and investment
strategy will be as per Scheme Information Document
No. of Stocks
Small-cap Exposure
Mid- & Large-cap Exposure
40-65 Stocks
70-90% of the portfolio
10-30% (Tactical allocation and
for liquidity purpose)
Why Systematic
Investment Plan
(SIP)
Wealth Creation through SIP
Investing at regular intervals
irrespective of market
volatility averages out the
buying cost thus avoiding the
common mistake of buying
‘HIGH’ and selling ‘LOW’.
Regular, bite-sized
investments making it
affordable for investors
with small investible
corpus
Helps reap the
benefits of
compounding
Lower risk as exposure is
spread over a long period
of time
Ease of
investment
Top Stock Holdings
Portfolio Statistics of ICICI Prudential Smallcap Fund
Source: CRISIL; Data as of December 31, 2020; The stocks/sectors mentioned in this slide do not constitute any recommendation and ICICI Prudential Mutual Fund may or may not have any future position in these stocks/sectors. the asset
allocation and investment strategy will be as per Scheme Information Document.
Top Sector Holdings
Company Name % to NAV
Dixon Technologies (India) Ltd. 3.6
Mahindra Lifespace Developers Ltd. 3.6
Birlasoft Ltd. 3.3
Inox Leisure Ltd. 3.3
Brigade Enterprises Ltd. 3.0
Computer Age Management Services Ltd. 2.9
Jm Financial Ltd. 2.9
SRF Ltd. 2.8
Cholamandalam Financial Holdings Ltd. 2.8
Heidleberg Cement India Ltd. 2.7
Company Name % to NAV
Finance 16.3
Construction 11.4
Industrial Products 8.4
Consumer Non Durables 8.3
Software 7.4
Consumer Durables 7.2
Cement 5.5
Chemicals 4.5
Pharmaceuticals 4.0
Healthcare Services 3.9
Portfolio Features
Type of Scheme An open-ended equity scheme, predominantly investing in smallcap stocks
Plans
ICICI Prudential Smallcap Fund &
ICICI Prudential Smallcap Fund – Direct
Options Growth & Dividend (Monthly Dividend & Others)
Minimum Application Amount Rs. 5,000 (plus in multiples of Re.1)
Minimum Additional Application Amount Rs. 1,000 (plus in multiples of Re.1)
Minimum Redemption Amount Any amount
Entry Load Not applicable
Exit Load
Upto 1 Year 1% of applicable NAV
More than 1 Year Nil
Fund Manager S. Naren & Harish Bihani
Priyanka Khandelwal for Overseas Investments.
Benchmark Index Nifty SmallCap 250 TRI
SIP / SWP / STP Available
Riskometer & Disclaimer
Mutual Fund investments are subject to market risks, read all scheme related documents carefully.
All figures and other data given in this document are dated. The same may or may not be relevant at a future date. The AMC takes no responsibility of updating any data/information in this material from
time to time. The information shall not be altered in any way, transmitted to, copied or distributed, in part or in whole, to any other person or to the media or reproduced in any form, without prior written
consent of ICICI Prudential Asset Management Company Limited. Prospective investors are advised to consult their own legal, tax and financial advisors to determine possible tax, legal and other finan-
cial implication or consequence of subscribing to the units of ICICI Prudential Mutual Fund. Data source: Bloomberg, except as mentioned specifically.
Disclaimer: In the preparation of the material contained in this document, ICICI Prudential Asset Management Company Ltd. (the AMC) has used information that is publicly available, including informa-
tion developed in-house. Some of the material used in the document may have been obtained from members/persons other than the AMC and/or its affiliates and which may have been made available
to the AMC and/or to its affiliates. Information gathered and material used in this document is believed to be from reliable sources. The AMC however does not warrant the accuracy, reasonableness
and / or completeness of any information. We have included statements / opinions / recommendations in this document, which contain words, or phrases such as “will”, “expect”, “should”, “believe”
and similar expressions or variations of such expressions, that are “forward looking statements”. Actual results may differ materially from those suggested by the forward looking statements due to
risk or uncertainties associated with our expectations with respect to, but not limited to, exposure to market risks, general economic and political conditions in India and other countries globally, which
have an impact on our services and / or investments, the monetary and interest policies of India, inflation, deflation, unanticipated turbulence in interest rates, foreign exchange rates, equity prices or
other rates or prices etc. ICICI Prudential Asset Management Company Limited (including its affiliates), the Mutual Fund, 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 material
in any manner. Further, the information contained herein should not be construed as forecast or promise. The recipient alone shall be fully responsible/are liable for any decision taken on this material.
ICICI Prudential Smallcap Fund is suitable for investors who are seeking*:
Long Term wealth creation
An open ended equity scheme that seeks to generate capital appreciation by predominantly investing in equity and
equity related securities of small cap companies.
*Investors should consult their financial advisers if in doubt about whether the product is suitable for them
The Risk-o-meter(s) specified above will be evaluated and updated on a monthly basis. Please refer https://www.icicipruamc.com/news-and-updates/all-news for more details