ICICI Prudential Business Cycle Fund NFO opens; should you invest?
ICICI Prudential Mutual Fund has announced the launch of ICICI Prudential Business Cycle Fund. The new scheme aims to identify and invest in opportunities across sectors/themes/market caps, based on the prevailing business cycle. Read on to know more.
What is the scheme
ICICI Prudential Business Cycle Fund is an open-ended equity scheme that aims to provide long term wealth creation by investing in equity and equity related securities with a focus on riding business cycles through dynamic allocation between various sectors and stocks. The scheme will have a minimum of 80% in equity and equity-related instruments selected on the basis of the business cycle.
ICICI Prudential Business Cycle Fund will follow a top-down approach right from monitoring macro indicators (global and domestic), identifying business cycle followed by determining suitable theme/sectors and selecting the stocks within these theme/sectors.
Why business cycle investing
An ongoing business cycle may extend or shorten depending on the macroeconomic conditions and the fiscal and monetary policy response by the government and central banks during a business cycle. Such times can often provide appropriate opportunities for investment.
ICICI Prudential Business Cycle Fund offers a different style that focuses on macros. By investing, investors can gain access to appealing sectors at any particular point in time. It will further aim to achieve diversification within those sectors.
During the early expansion phase, cyclical stocks tend to outperform. In the contraction period, the defensive groups like health care, consumer staples, etc. outperform because of their stable cash flows and dividend yields.
In the coming decade, volatility is expected to be elevated. So, the ICICI Prudential Business Cycle Fund promises to be nimble as the macro environment may change. It aims to move between themes quickly so that the portfolio should be able to prudently position between various themes.
Do note this is not a Value / Contra / Special Situation/ Growth style of investment.
Speaking on the launch of the product, Nimesh Shah, MD & CEO, ICICI Prudential AMC said, â€œStock market sector returns generally are affected by the various business cycle phases. A typical business cycle will have 4 distinct phases viz., Growth, Recession, Slump & Recovery. While each phase is different, an investment approach that identifies and analyses key phases in the economy could help generate a positive investment experience.”
ICICI Prudential Mutual Fund has one of Indiaâ€™s largest and experienced investment team led by S Naren, who is well known for his calls on macros and market cycles.
Who will manage the scheme
The scheme will be managed by Anish Tawakley, Ihab Dalwai, and Manish Banthia.
What is the benchmark of the scheme
The benchmark of the scheme is Nifty 500 TRI.
When will the scheme open, close
The New Fund Offer (NFO) opens on December 29, 2020 and closes on January 12, 2021.
Plans: 1. ICICI Prudential Business Cycle Fund, 2. ICICI Prudential Business Cycle Fund â€“ Direct
Options: Growth & Dividend
SIP / SWP / STP: Available
Minimum Application Amount: Rs. 5,000 (plus in multiples of Re.1)
Minimum Additional Application Amount: Rs. 1,000 (plus in multiples of Re.1)
Minimum Redemption Amount: Any amount
Entry Load: Not applicable
Exit Load: 1% of applicable NAV if money is redeemed within 12 Months