In its recent offer, the ICICI Prudential fund management company has come out with the new scheme called ICICI Prudential Focused Equity Fund. It is an open-ended scheme, typically a diversified equity fund.
Investment objective of ICICI Prudential Focused Equity Fund
As per the advertisements, the ICICI Prudential Focused Equity Fund will attempt to generate long term capital appreciation by investing a majority of its assets in equity and equity related instruments and the rest in debt securities and money market instruments.
How many companies will the fund typically invest in?
The investment scheme will remain limited to 20 large cap companies from the top 200 stocks listed on the NSE on the basis of market capitalization. However, it is not a constraint. If the response to the fund is overwhelming and if the investors take the total assets worth morth than Rs.1000 crore then more company stocks, in addition to the top 20 large companies would be added to the portfolio.
Fund Manager of ICICI Prudential Focused Equity Fund
Mr. Anand Shah will be the manager of this fund. He has more than 7 years of fund management experience.
Issue opening date : 8th April, 2008
Issue closing date : 7th May, 2008
Fund Category : Open Ended Diversified Equity Fund
Benchmark : S&P CNX Nifty.
Minimum investment : Regular Plan - Rs. 5000, Institutional Plan: Rs. 10 crore.
Load structure:
Regular Plan
Entry Load : 2.25% for investment of less than Rs 5 crore, > 5 Crore - NIL
Exit Load : 1% if withdrawn within less than six months for amount less than Rs. 5 Crore,
Institutional Plan
No-load
Performance of the ICICI Prudential AMC:
As per the news from Value Research Online: After Reliance, ICICI Prudential Mutual Fund is the second largest AMC in terms of asset under management (AUM). Its average AUM as on March 31, 2008 was Rs 52,935 crore.. Currently ICICI Prudential manages more than 160 funds of which 26 funds are equity funds and most of them are equity diversified funds (21). ICICI Prudential Mutual Fund has to its credit four 5-star, eleven 4-star and 18 3-star rated funds.
Similar Funds:
There are quite a few focused yet actively managed equity funds Kotak-30, UTI-Leadership Equity and Sundram BNP Paribas Select Focus Fund.
Tax Benefit available under ICICI Prudential Focused Equity Fund:: No Tax benefit
Final Comments:
Typically, what this fund and the fund manager is trying to bet on the performance of the large cap stocks. In the current phase, when the stock market is seeing a lot of volatility, it would be interesting to see the behaviour of this portfolio of top 20 stocks. This portfolio, if strictly holding to top 20 stocks of Nifty, can be considered as an index of top 20 stocks.
So individuals interested in investing in such kind of index can opt for it. However, I’m not in favour of the high fund management charges, which stand at 2.25%. Compare this tobuying ETF, where you have to pay a very small brokerage, less than 0.5%.
Second thing that I want to highlight is about the fund managers efficiency in always sticking to the top 20 stocks. As I’ve explained in my previous post, that no fund manger can continuously beat the markets and it is impossible for anyone to track the market constituents in the most accurate way, the same will be the drawback with this fund. If a stock from position 30 jumps up and comes into top 20, how soon will the fund manager be able to buy it at the cheapest price and include it in his portfolio?
Another thing is that if the fund managers are so much confident about the performance of the top 20 stocks, then can they guarantee any returns?
| Anyways, overall this fund looks a good bet to me for the individuals who are willing to bet their money on large caps. It obviously comes at a costly entry load of 2.25%. | Table of Contents |
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