ICICI Prudential Credit Risk Fund: Fund review

The portfolio of the scheme is well-diversified which to a large extent reduces risks associated with concentrated exposure.

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After the IL&FS default, the street’s perception about credit-risk funds has turned unfavourable. One of the factors most investors found peculiar is the default of a AAA-rated paper. This is a key reason extremely conservative investors have been shying away from credit-risk funds. Credit-risk schemes invest in securities which have rating either equal to AA or less than AA. Securities which have rating less than AA are considered risky. For investors who are savvy, knowledgeable, and have reasonably higher risk appetite than a conservative retail investor, there are ways to navigate and seek less risky assets in this universe of risky assets. Such investors have to bear in mind two key factors which to a large extent can mitigate risks associated with credit-risk schemes. One, look at schemes which invest in large number of securities. Two, check how concentrated or diversified is the exposure of the scheme to issuers. Three, one can look at the extent of exposure of a scheme to less than AA-rated papers.

One such scheme that ticks all the boxes is ICICI Prudential Credit Risk Fund. ICICI Prudential Credit Risk’s exposure to papers which have rating less than AA and A is less than the category average. Second, its portfolio is well-diversified with number of securities which to a large extent reduces risks associated with concentrated exposure.

  • 6.09%Annualized Return for 3 year
  • >3 years Suggested Investment Horizon
  • N.ATime taken to double money
  • 7.65%Annualized Return for 3 year
  • >3 years Suggested Investment Horizon
  • N.ATime taken to double money
According to Value Research, the scheme has exposure to 119 securities and 50 issuers and the average holding of an issuer of the scheme is 2-3%. This is a reasonably good portfolio which is quite diversified and relatively low on risk. Its yield to maturity is 10.5% as opposed to 10.4% of its category.


Portfolio composition
Portfolio details Fund 1Y high 1Y low Category
Number of securities 119 127 119 69
Average maturity (yrs) 1.47 2.10 1.47 2.03
Yield to maturity (%) 10.50 10.50 9.34 10.41

Credit rating exposure vis-a-vis category
Rating ICICI Pru Credit Risk Fund Category
AA 50.61 65.58
A and below 32.69 44.12
AAA 5.93 12.26
Unrated/others 3.44 8.98



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Returns peer comparison (in%)
Scheme 1-year 3-year 5-year
Aditya Birla Sun Life Credit Risk Fund
5.53 7.92 -
Baroda Credit Risk Fund - Plan A 5.34 8.11 -
Franklin India Credit Risk Fund 7.93 8.90 9.20
Source: Accord Fintech, Compiled by ETIG Database

Expert Take
Rupesh Bhansali, head-mutual funds, GEPL Capital

The scheme’s exposure to unrated and single-rated papers is almost 35%, which means that a large part of the scheme’s portfolio is into AA and AAA papers. Apart from that, the scheme’s yield of 10.5% is quite attractive. Also the average exposure to securities is in the range of 2-3%, which mitigates risks to a certain extent.
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