ICICI Prudential's Dynamic Asset Allocation Active Fund-of-Fund posted a 1.9% return in the last month, outperforming its benchmark. While this fund leads in the one-month period, other funds within the same house show better results over longer timelines, highlighting the importance of looking beyond short-term data when evaluating mutual fund performance.
What Happened
The ICICI Prudential Dynamic Asset Allocation Active Fund-of-Fund has emerged as the top performer in the hybrid fund-of-funds category over the past month. According to data from ACE MF as of June 25, 2026, the fund delivered a 1.9% return, outperforming its benchmark index by 1.5 percentage points. The benchmark index itself recorded a much lower return of 0.4% for the same one-month period. With assets under management (AUM) of Rs 28,240.8 crore, this fund is one of the larger schemes in the category.
Why Performance Varies Over Time
It is common in the mutual fund industry to see rankings change depending on the time period being measured. While the Dynamic Asset Allocation fund led the one-month charts, other schemes from the same fund house have shown dominance over longer durations.
For instance, the ICICI Pru Income plus Arbitrage Omni Fund-of-Fund secured the top spot over the six-month period with a 3.3% return and also led the one-year category with a 6.3% gain. Looking even further out, the ICICI Pru Aggressive Hybrid Active Fund-of-Fund was the leader over a three-year basis, delivering a 15.1% return. This shifting performance highlights why investors should not rely solely on short-term rankings when making decisions.
Understanding Fund-of-Funds
A Fund-of-Funds (FoF) is a mutual fund scheme that invests in other mutual fund schemes rather than directly in stocks or bonds. This structure allows the fund manager to create a portfolio of various underlying funds to manage risk and return. Because the performance of an FoF depends on the underlying funds it chooses, it can behave differently compared to standard equity or debt funds. Investors often choose these funds for diversification, as they gain exposure to multiple strategies through a single investment.
The Importance Of Long-Term Perspective
When looking at fund performance, industry experts often suggest that one-month or even six-month returns are not enough to judge a fund's quality. Markets go through cycles, and different strategies—such as dynamic asset allocation, arbitrage, or aggressive hybrid—perform differently during these cycles.
For example, while the Dynamic Asset Allocation fund outperformed its benchmark by 6.5 percentage points over the last year, other funds may be better suited for different investor timelines. Returns for periods longer than three months are calculated on a Compound Annual Growth Rate (CAGR) basis, which smooths out returns over the year, whereas shorter periods are typically shown as absolute returns. Investors may find it more useful to compare funds over three to five years to see if the fund manager consistently meets the fund's objective, rather than chasing short-term monthly gains.