Model Portfolio Update By ICICI-Direct (Jan 2016)

Our indicative large cap equity model portfolio (“Quality-20”) has continued to deliver an impressive return (inclusive of dividends) of 86.5% since its inception (June 21, 2011) vis-à-vis the index return of ~51.8% during the same period, an outperformance of ~35%. This validates our thesis of selecting companies with sound business fundamentals that form the core theme of our portfolio. Our midcap portfolio (“Consistent-15”) outperformed the benchmark by ~2x since June 2011. Our consistent outperformance demonstrates our superior stock picking ability as markets in CY15 aligned to our view of favourable risk-reward, good franchisee vs. reward-at-any-risk businesses. Some key performers of our portfolio are Lupin, HDFC Bank and TCS in the large cap portfolio while Natco Pharma, Cummins and Shree Cement have delivered stupendous returns in the midcap portfolio

We continue to remain underweight on metals and oil & gas with our only pick being Reliance Industries and Tata Steel, which have a better risk reward opportunity. We expect PSU banks to underperform next year owing to steep asset quality woes ahead. In the private banking space, we prefer large banks with a strong retail presence. We continue to remain overweight to neutral on pure play defensives (IT FMCG) as secular earnings coupled with sector rotation could lead to consolidation in near term valuations and offer stock specific opportunities. We remain positive on auto, pharma, capital goods and infrastructure.