The Astonishing Power of Long-Term Compounding
Investing in equity markets has the potential to generate enormous wealth, but the true magic unfolds when you commit to staying invested for the long haul. The key lies in the process of compounding, where the returns you earn in the initial years are reinvested, becoming part of your principal and significantly boosting the potential for future gains. To illustrate this powerful financial principle in action, we take a detailed look at the performance of the ICICI Prudential Value Fund.
ICICI Prudential Value Fund: A 21-Year Wealth Journey
The ICICI Prudential Value Fund was officially launched on 16 August 2004. For those new to the term, value mutual funds are schemes that specifically target stocks which are currently trading below their intrinsic worth. The fund managers believe these undervalued companies have strong potential for growth as the market eventually recognizes their true value over time.
Let's examine the numbers. If an investor had allocated a sum of ₹1 lakh at the fund's launch in August 2004, that investment would have grown to a staggering ₹48.5 lakh by 31 October 2025. This remarkable growth translates to an annualised return of 20.1%, as confirmed by data from the asset management company (AMC).
The fund's performance over shorter periods is also noteworthy. A ₹1 lakh investment made just three years ago would have appreciated to ₹1.77 lakh today. Similarly, an investment made five years ago would have expanded to ₹2.66 lakh.
The SIP Advantage: Building Crores from Consistent Savings
The results are even more impressive for those who invested through a Systematic Investment Plan (SIP). Since the fund's inception, a disciplined monthly SIP of ₹10,000 would have led to a total capital outlay of ₹25.5 lakh. Through the relentless power of compounding, this total investment would have ballooned to an astounding ₹2.40 crore as of 31 October 2025.
The fund's current portfolio showcases a strategic allocation to some of India's corporate giants. Its top holdings include Reliance Industries Limited (RIL) at 7.23%, followed by Infosys (6.91%), HDFC Bank (6.48%), ICICI Bank (6.31%), TCS (4.53%), Axis Bank (4.49%), and Sun Pharma (4.46%). The scheme is managed by a team of experienced professionals: Masoomi Jhurmarvala, Dharmesh Kakkad, and Sankara, and boasts an Assets Under Management (AUM) of ₹55,444 crore.
Expert Insight: Navigating High Valuations with Value Investing
Sankaran Naren, Executive Director & Chief Investment Officer at ICICI Prudential AMC and a fund manager for this scheme, offers valuable perspective for current market conditions. He suggests that in an environment where stock valuations are elevated and global indices are trading near all-time highs, investors can consider two prudent approaches. The first is to strictly adhere to a disciplined asset allocation strategy. The second is to embrace value investing.
Naren points out that even in a bullish market, certain sectors or stocks will experience phases of underperformance. These periods create attractive entry points for investors who are focused on uncovering long-term value. This philosophy is at the core of the fund's investment strategy.
This analysis is for informational purposes only. It is highly recommended that you consult with a SEBI-registered investment advisor before making any investment decisions.
