It seems that the entire mutual fund industry is attempting to bank upon the Banking and financial services sector. Recently launched funds in the Banking and financial domains are: Reliance Banking Exchange Traded Fund (RBTEF), Lotus India Banking Fund & Sundaram BNP Paribas Banking & Financial Services Fund.
However, the Banking stocks have taken a massive hit recently due to the recent turmoil in the interest rates, especially where ICICI Bank raised the interest rates by 75 basis points for home loan borrowers and HDFC bank increased it in the range of 50 to 75 basis points.
Now ICICI has come out with this fund at a time when banking stocks are struggling.
What are the unique and special features about ICICI Prudential Banking and Financial Services Fund?
Nothing new. The ICICI Prudential Banking and Financial Services Fund is another open ended equity mutual fund which will primarily invest in equity stocks and equity related financial instruments of companies which have businesses in Banking and financial services domain. Its an open ended fund, which means new units can be created as required and redeemed as per the demand and supply.
What are the entry load and exit loads of ICICI Prudential Banking and Financial Services Fund?
The fund requires a standard entry load of 2.25% and exit load of 1% for investments less than 5 crore Rupees during the NFO or new fund offer period. The exit load will be charged if investors exit the fund within 6 months from the date of allotment.
What are the opening dates and closing dates of New fund offer or NFO of ICICI Prudential Banking and Financial Services Fund
The NFO for ICICI Prudential Banking and Financial Services Fund opens on date 9th July 2008 and closes on 7th August 2008.
Is it a right time to launch such a bank related fund?
The ICICI Prudential Banking and Financial Services Fund will focus on banking and financial sector and the companies in this sector are witnessing mayhem due to hike in the interest rates. However, it is possible to get a cheap bargain for banking stocks in such turbulent times for the banking stocks. Its pure randomness.
Should the investors invest in this ICICI Prudential Banking and Financial Services Fund?
I’ve always been an opponent of Mutual fund investments for this reason. The primary reason being high fund management charges and no guarantee of returns. Even though the banking stocks are available for cheap now, nobody is certain what will be the situation when the NFO closes and the fund manager actually buys the shares and invest the money. What is the guarantee that fund manager will take the right decision and invest your money at the cheapest possible price? What if he is afraid of volatility and decides to sit on cash instead of investing money?
| It all works randomly. Instead of paying such high charges to the fund manager, a better option would be to buy Banking ETFs like that of Reliance Banking ETF or buy 1 or 2 banking stocks directly, like SBI HDFC or ICICI. | Table of Contents |
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