In this article, we will analyse how good is this ICICI Prudential Nifty Junior Index Fund NFO, whether this ICICI Prudential Nifty Junior Index Fund offers anything new or unique for the investors and whether the investors should invest in ICICI Prudential Nifty Junior Index Fund .
ICICI Prudential Nifty Junior Index Fund NFO: Review Analysis & Details
Let's begin with some basic details about ICICI Prudential Nifty Junior Index Fund.What are the NFO dates for ICICI Prudential Nifty Junior Index Fund ?
The NFO period for ICICI Prudential Nifty Junior Index Fund will open on 10th June and will close on 21st June 2010.
What is so unique about this ICICI Prudential Nifty Junior Index Fund?
The ICICI Prudential Nifty Junior Index Fund is going to invest in securities or stocks which will be part of the Junior Nifty Index - this is the index which is comprised of top 51 to 100 companies in order of market capitalization. This is a mutual fund from ICICI which will be following a passive investment strategy and is an index fund (Index Funds Explained with Example).
That's where the name "Nifty Junior Index Fund" is derived from. So this ICICI Prudential Nifty Junior Index Fund will primarily invest the capital collected from investors in the available stocks of Junior Nifty Index and try to match the performance of the Junior index. Offcourse, the tracking error will come into play and that's where the skills of the mutual fund manager will become important on how well he can minimize the tracking error. For those of your dont know, tracking error is the amount difference in the returns generated by a mutual fund, as compared to the returns generated by its underlying index. Now since the index does not have any brokerage commission or trading charges, but a mutual fund does have them, so the tracking error gets introduced into the index funds.
This ICICI Prudential Nifty Junior Index Fund will try to replicate the returns of the Junior index of Nifty. The fund can be a good option for investors who believe in the so called mid-cap story, that the returns from mid-cap stocks will be better. Here is an article about the Relative performace of mid-cap stocks v/s large-cap stocks over a period of time. Anyways, performance do vay with time and one should check for own risk appetite before taking the plunge. But in my personal opinion, investors who belive in the mid-cap story and believe in index funds of the same, must also consider midcap index based ETF's rather then index funds. They offer you intraday price changes where one can capitalize on the intraday price movements, instead of the end of the day NAV by the mutual funds. Moreover, the index funds rebalancing frequency also matters a lot in terms of performance and returns. If the index fund manager rebalances the portfolio frequently, he ends up loosing a lot of profit to broekrage and commission. If he does it at large intervals of time, he ends up buying at high prices and selling at lows.
However, if you wish to keep the trading headaches off and rely on the investment and trading skills of the ICICI Prudential Mutual Fund Managers, then you can invest in this fund.
Hence, it again boils down to the trading activites of the fund manager.
Are there any alternatives to ICICI Prudential Nifty Junior Index Fund?
Yes. As stated above, one can look for investing on his own in Midacp based ETF's. For any mutual funds, we usually always recommend going for equivalent ETF or Exchange Traded Funds on the same underlying index. They come with the benefit of exact tick by tick price movements, rather than end of the day NAV. That allows traders to benefit from intra-day price movements and make good money. Although they incur brokerage charges which vary from broker to broker. (See trading example of an ETF)
The ICICI Prudential Nifty Junior Index Fund will be benchmarked to CNX Nifty Junior Index Mr. Kayzad Eghlim will be the Fund manager for ICICI Prudential Nifty Junior Index Fund.
Minimum Investment:
Purchases : Rs. 5000/- and in multiple of Re. 1 thereafter.
SIP or Systematic Investment Plan is available? - Not Known
Investment Options for ICICI Prudential Nifty Junior Index Fund :
- Growth
- Dividend (Payout and Reinvestment)
No Tax Benefit is available in the ICICI Prudential Nifty Junior Index Fund
The entry load for ICICI Prudential Nifty Junior Index Fund is as follows:
Entry Load for ICICI Prudential Nifty Junior Index Fund :
Zero Entry Load
Exit Load for ICICI Prudential Nifty Junior Index Fund:
0.25% if the amount sought to be redeemed or switched out is invested up to 7 days from the date of allotment, nil thereafte
Final Thoughts about the ICICI Prudential Nifty Junior Index Fund?
By investing in this fund, one is betting on the skills of the fund manager on how well he can keep tracking error to minimum efficiently and makes his trades on behalf of the investors for the same
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