Fund Manager Talk | ICICI Prudential's quality-focused pitch for long-term gains

As markets tread cautiously successful a satellite of stretched valuations and tempered net expectations, ICICI Prudential AMC is turning the spotlight backmost connected an aged faithful—quality. In this variation of Fund Manager Talk, Ihab Dalwai, Senior Fund Manager, makes a lawsuit for wherefore it’s clip to revisit this underappreciated taxable arsenic a semipermanent portfolio anchor.

Edited excerpts from a chat:

Markets are marching to a caller tune amid each the accent astir tariff warfare and Indo-Pak tensions. How are you speechmaking this phase, and what’s your outlook for equity markets successful FY26?
We judge the marketplace is apt to stay volatile successful the adjacent word owing to assorted uncertainties successful the signifier of commercialized tariffs, imaginable US slowdown, geo-political hostility to sanction a few. On the home front, adjacent though definite pockets successful the marketplace person seen sizable corrections, valuations proceed to stay supra average. Also, going forward, earnings growth trajectory is apt to moderate. As a result, we judge the upside expectations should beryllium calibrated successful enactment with net growth.

In a twelvemonth wherever net surprises are mixed and macros are wobbling, what’s your compass arsenic a money manager—valuation comfort, net resilience, oregon thematic plays?

Reasonable valuation and net resilience is important. Moreover, scouting for ideas mostly happens successful underperformed, nether owned segments of the marketplace wherever anticipation is muted.

Let’s speech astir the ICICI Prudential Quality Fund. What makes this money timely successful today’s volatile, valuation-sensitive environment?
Quality arsenic a taxable has underperformed the broader marketplace implicit the past four-five years. This indicates a deficiency of capitalist involvement resulting successful tenable valuation, making it a bully introduction constituent if 1 adopts a agelong word concern philosophy. In the backdrop of the existent planetary economical uncertainty, and mean net maturation anticipation from firm India, we judge this is an optimal clip to see the prime theme.

Many would reason that the “quality” conception has already had its time successful the sun. Why bash you deliberation present is the clip to treble down connected it?
Over the past fewer months, prime arsenic a taxable has gathered gait successful presumption of performance. But that should not deter investors from considering quality, particularly agelong word investors, arsenic this taxable is conscionable coming disconnected from a 4-5-year underperformance phase.

The money promises to flex crossed sectors and marketplace caps. Could you decode however that flexibility plays retired successful practice? Is it much bottom-up condemnation oregon macro-driven allocation?
We judge determination are prime names disposable crossed sectors and marketplace capitalisations. From a portfolio construction perspective, we purpose to trim assemblage concentration. There volition beryllium progressive bottommost up banal picking wrong the mid and tiny headdress space. Over time, our assemblage preferences volition beryllium reflective successful our portfolio positioning.

Is this money an all-weather stake oregon should investors dainty it arsenic a outer allocation—especially with worth and momentum themes inactive buzzing?
We judge prime based offering is an all-weather fund, particularly astatine a clip erstwhile this benignant is coming disconnected aft a play of underperformance. Generally, if 1 invests successful precocious prime companies with robust absorption which tin allocate superior well, the net thin to compound for a agelong period. Hence this strategy tin beryllium looked astatine for agelong word investments.

The money has precocious ROE, ROIC, and dependable superior allocation arsenic enactment filters. But successful a satellite crowded with data, however bash you spot prime earlier it becomes consensus?
Generally, erstwhile it comes to prime investing, the statement oregon non-consensus presumption is not connected net maturation but connected sustainability and durability of moat which is helping the institution gain its precocious ROE. A ample portion of the instrumentality successful quality investing is generated erstwhile the marketplace believes that the moat believed successful is not sustainable portion the investee institution is capable to gain precocious ROE for an extended play and is besides capable to reinvest for growth.

With the Quality Fund entering a abstraction wherever the maturation versus worth statement is heating up, what’s your connection to investors inactive sitting connected the fence?
Historically, prime arsenic a strategy has worked good for adjacent those investors who are not precise assertive connected the hazard spectrum arsenic the risk adjusted return for prime has been superior to the broader marketplace and astir different styles of investing. Hence if an capitalist is looking for a afloat invested equity strategy to allocate to, past they whitethorn see this prime based offering.