ICICI Prudential Medium Term Bond Fund B Quarterly Reinvestment Inc Dist cum Cap Wdrl INF109K01IQ8

The transition of lead manager responsibilities from Manish Banthia to Akhil Kakkar doesn’t alter ICICI Prudential Medium Term Bond's prospects as it continues to draw on Banthia's extensive experience and Kakkar's robust credit research expertise. The enhanced turnover in the team is a cause for concern. But a large and well-resourced team, an institutionalized investment processes, and a team-based investment culture continue to merit an Above Average score for the People and Process pillars.

Portfolio manager and CIO of fixed income Manish Banthia has played a crucial role in this fund since November 2016, assuming the lead in January 2018. However, he has transitioned lead manager responsibilities to Akhil Kakkar. Kakkar joined this fund as comanager in January 2024 but has worked with Banthia as comanager of ICICI Pru Credit Risk Fund since June 2017. He therefore has a thorough understanding of the strategy and investment approach. With Kakkar's experience and familiarity with the credit strategies, its prospects remain strong. Banthia will continue to comanage the fund, providing significant oversight to ensure continuity and stability in its investment function.

The fixed-income team witnessed enhanced turnover over the past few years. Significant departures include CIO of fixed income Rahul Goswami, co-fund managers Anuj Tagra and Chandani Gupta, head of risk management Amit Bhosale, and two analysts. The fund house managed these exits by internally promoting existing talent and hiring both experienced professionals and fresh graduates. This ensured that the team remained large, reasonably resourced, and experienced. However, we would like the team to display better stability going ahead.

There are several aspects where this fund scores over peers. The investment team on the credit side is experienced and has a well-organized structure with defined responsibilities. It has worked toward reducing the dependency on one individual or fund manager, thereby promoting a team-based investment culture. This is a prudent approach that will hold the fund in good stead over the long term.

The team adheres to a board-approved security selection policy, ensuring that any new security addition to the investment universe receives board approval. This structured, institutionalized investment process, with a clearly defined mandate, simplifies execution for managers. This disciplined approach enables the team to identify and avoid riskier credits, even those with high credit ratings. Prioritizing safety over outsized returns, the team is willing to forgo high-yield investment opportunities that could expose the fund to unwarranted risks. This strategy enabled the fund to navigate through volatile periods in the Indian debt markets more comfortably than many of its credit-centric peers, thereby safeguarding investor interests.

The turnover within the team remains a watchpoint. However, experienced managers at the helm, a well-organized team structure, and a robust investment process that has proved its proficiency in tackling riskier and volatile times better make this fund one of the best options for investors looking to invest in a credit-oriented fund from the medium duration Morningstar Category.