ICICI Prudential AMC has launched a new fund offer called ICICI Pru Housing Opportunities Fund which is open for subscription since March 28th, 2022 and closes on April 11th, 2022. This open-ended equity scheme will primarily be following the housing theme with the objective to generate wealth in the long term. The fund will mainly invest in equity and equity-oriented instruments of companies that are involved in or expect benefits from the housing sector growth.
ICICI Pru Housing Opportunities fund follows an investment approach that is focused on the different opportunities that are available in the housing theme. It aims to design and maintain a portfolio of stocks that are expected to participate in the housing growth theme. The fund will be managed by Sankaran Naren and Anand Sharma and the fund’s benchmark index will be Nifty Housing TRI.
Exposure to real estate: ICICI Prudential Housing Opportunities Fund is ideal for investors who are looking for long-term wealth appreciation through equity investment in real estate, REITs and INVTs. Ideal for investors who are looking for long-term investment and portfolio diversification, this fund aims for long-term capital appreciation by following the Nifty Housing TRI.
Segment growth opportunity: The Indian real estate sector is expected to grow exponentially as the country’s population is set to overtake China within the next decade. This growth is expected be remain stable till at least 2050, thus offering a large-scale business opportunity for real estate companies. By investing in this fund for the long term, investors can make the most of the growth opportunity available in the domestic market.
Favourable government policies: The central government and various state governments in the country are constantly offering stimulus to the real estate sector through various supportive measures. The Union Budget this year too focused heavily on Capex and offering affordable housing apart from encouraging FDI in the sector.
Easy investment: It is easy to invest in this mutual fund through the Fisdom app. Since this fund will mainly invest in the real estate sector, investors who wish to gain real-estate equity exposure can invest in this fund.
Risk-Return Matrix of Nifty Housing Index: In the table below, investors can look at the risk-return performance of Nifty housing index vs Nifty 50 index:
| Nifty housing index | Nifty 50 | |||
| 1 Yr | 5 Yr | 1 Yr | 5 Yr | |
| Return % | 38.02% | 15.66% | 27.18% | 15.16% |
| Standard deviation | 17.94% | 20.04% | 15.68% | 18.33% |
| Scheme name | NFO details for ICICI Pru Housing Opportunities fund |
| Type of Scheme | An open-ended equity scheme based on housing theme. |
| Category of the scheme | Equity mutual fund |
| Benchmark | Nifty Housing TRI |
| Plan options | Regular and Direct plans with growth option |
| Fund Manager | Mr. Sankaran Naren Mr. Anand Sharma |
| Exit Load | Less than 1 month – 1% of applicable NAVMore than 1 month – Nil |
| Minimum Investment | Rs. 5,000 (plus in multiples of Re.1)Additional investment – Rs. 1,000 (plus in multiples of Re.1) |
| Expense Ratio | Not known yet |
| NFO Period | 28 Mar 2022 – 11Apr 2022 |
Where can you invest in the NFO?Head over to the Fisdom App to invest in this NFO.
NFO (New Fund Offer) is launched by the Asset Management Companies (AMCs) to generate funds for launching a new mutual fund. These funds are then pooled to buy the shares or other securities as per the fund’s mandate or the guidelines based on which the fund is launched. NFOs are like IPOs where all the relevant details of the funds are provided at the time of their launch and the units of the fund are usually set at Rs. 10 per unit for a subscription. SEBI guidelines allow the NFOs to be active for a maximum period of 30 days following which the units of the fund are traded based on their daily NAV.
NFOs, at the time of their launch, are launched in two categories namely close-ended funds and open-ended funds. The details of each type of fund are mentioned below.
Open-ended funds
The majority of mutual funds are launched as open-ended funds. Investors can subscribe to the fund at the nominal rate (usually Rs. 10 per unit) during the NFO period. After the NFO period, when the units are traded based on the daily NAV, the investors stand to gain huge capital gains depending on the performance of the fund.
Close-ended funds
Close-ended funds, on the other hand, do not allow the investors to subscribe to the fund after the NFO period is closed.
Investing in NFOs is a very good opportunity to maximize the returns as the units can be subscribed at nominal rates and the returns are potentially higher based on the prevailing NAV at the time of redemption. However, there are several points that need to be considered while subscribing to an NFO. Some of such points are highlighted below.
a)Track record of the AMC
NFOs are offered for the new mutual fund so no proven track record can be reviewed by investors to make an informed investment decision. The investors have to therefore rely on the reputation of the AMC and other details mentioned in the NFO to make an investment decision.
b)Expense ratio (if mentioned)
NFOs need a good amount of publicity to make the investors aware of the fund and the investment opportunity. It is therefore essential for the investors to check the expense ratio of the fund and ensure that it does not outweigh the net gains.
c)Check if the fund is in correlation to the existing portfolio
Recently there have been many NFOs in the market that investors can choose from. However, while selecting the fund the investors must check if the fund is not similar to an existing fund in their portfolio. For example, if the fund is a large-cap fund and the investor already has one or two similar funds in their portfolio, investing in another will not add much value to the net returns or the diversification of the portfolio. On the other hand, many NFOs can be sector-specific or country-specific. In such a case, investors have to check if the fund is in line with other factors like their risk-return profile and investment goals.
d)Review the SID carefully
Reviewing the SID (Scheme Information Document) is a crucial step that should not be missed by investors while investing in NFOs. It contains all the relevant information about the fund managers, their qualifications, and experience which is crucial for the funds’ performance. Other relevant information includes the investment profile of the fund, target sectors or securities, benchmark index, asset allocation ratio, etc. This helps the investors understand the returns expectation of the fund as well as the target investments where the fund will invest the pooled funds. Investors having a risk-return profile in line with that of the fund can thus invest in such funds.
Investment in NFOs can be done through two main routes i.e., the online or offline modes. The details of the same are mentioned below.
a)Online mode
The online mode of investment is suitable for investors already having a Demat account and a trading account. Investors can simply select the NFO and invest by selecting the number of units to invest and paying for the same through online payment modes available on the platform.
b)Offline mode
The offline mode of investment in NFOs is through registered brokers and distributors. Investors can contact their brokers and distributors providing them with the details of the amount to be invested and they can invest in the selected NFOs on their behalf. Investors can make hassle-free investments through such modes as all the necessary forms to be filled and the formalities to be met are looked after by these entities giving investors the benefit of ease of investment. The charges for such services are nominal when compared to the potentially high returns.
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