Introduction
ICICI Prudential Mutual Fund is one of the leading mutual fund houses in the country and has come out with an NFO that invests in different sectors and businesses that focus on innovation and development of business or industry. ICICI Pru Innovation Fund will open on 10th April 2023 and will close on 24th April 2023. The fund will then open for regular subscription within 5 business days after the allotment of units.
Investment objective
The scheme aims to achieve long-term capital gains or capital appreciation through majorly investing predominantly investing in equity & equity related securities of companies and units of global mutual funds/ETFs that can benefit from innovation strategies and theme
Reasons to invest
1. Diversified portfolio
This fund will a good opportunity for investors to invest in businesses belonging to different sectors. Furthermore, the fund aims to primarily invest (about 80% or more of the fund) in companies adopting innovative strategies and themes. The balance of the fund will be invested in Overseas Securities that are adopting such innovation strategies and themes. This will include companies belonging to different sectors and involved in product/services/solution-related innovation.
2. Investment approach
The fund will select businesses for investment based on the bottom-up approach. The investment style under the fund will be a combination of value investing and growth investing. This will include investing in cash-cow companies that are trading at a discount, applying the margin of safety concept, and high dividend-yielding stocks. The fund will also invest in businesses that may have a premium valuation on account of their innovation and above-average revenue or profitability growth. The fund will focus on such companies with a leading edge in innovation that have lower debt and asset-light models coupled with higher margins and strong free cash flows.
3. Favorable environment for innovation
The world is still coming out from the after-effects of the global pandemic and the ongoing war between Russia and Ukraine has further disrupted the global supply chains. This has led to an increased focus on manufacturing and strengthening supply chains within the country and reduced dependencies on other economies. This has led to an increased focus on innovation enabling companies to excel in creating new products or services or businesses that have the potential to disrupt the market.
4. Target investors
The fund aims at long-term wealth creation and is, therefore, suitable for investors with long-term investment horizons. This fund will invest in companies that focus on innovation in their sector and the fund is also classified as a sectoral or a thematic fund. Hence, it can be a good bet for investors with a high-risk appetite.
Performance of the Benchmark
| Period | Nifty 500 TRI | Nifty Alpha 50 TRI | S&P BSE 500 TRI |
| 1-Year | -2.58% | -16.03% | -2.29% |
| 3-Year | 27.01% | 41.9% | 27.38% |
| 5-Year | 11.15% | 19.16% | 11.39% |
| Since Inception | 16.03% | 19.55% | 12.23% |
Risks of investment
1. Risk of investing in a thematic fund
ICICI Prudential Innovation Fund is a thematic fund that seeks to invest across companies that benefit from innovation strategies. The scheme is thematic in nature, hence will be affected by the risks associated with the innovation theme. Investors may face the risk of capital loss due to the high concentration risk for the thematic scheme.
2. Risk of Investment in innovative businesses
The majority of the fund will be invested in equity and equity-related instruments and in companies that are engaged in businesses that focus on innovation. The gestation period of such innovation can be quite long or, on the other hand, the said innovation can be for a short term and may not give desired results.
3. Geopolitical risks
This fund will invest 20% of the fund in foreign equity in the form of ADR / GDR / Foreign securities / Mutual Funds / ETFs. This exposes the fund to geopolitical risks
Fund details
The key details of the fund are tabled hereunder.
| Scheme name | ICICI Pru Innovation Fund NFO |
| Type of Scheme | An open-ended equity scheme following the innovation theme |
| Category of the scheme | Thematic Fund |
| Benchmark | Nifty 500 TRI |
| Plan and options | Plans – Regular Plan and Direct Plan Options Growth option and IDCW (Payout options and Re-investment option) |
| Fund Manager | Mr. Anish Tawakley and Vaibhav Dusad For Overseas investment-Sharmila D’Mello |
| Exit Load | 1% (if units are redeemed or switched out within 12 months) NIL (if units are redeemed or switched after 12 months) |
| Minimum Investment | Minimum Rs. 5,000 and in multiples of Re. 1/- |
| NFO Period | 10th April 2023 – 24th April 2023 |
FAQs
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.
New fund offers are launched with essentially two types of fund offers, namely, close-ended funds and open-ended funds. Close-ended funds have a fixed tenor and can be exited only after the tenor gets over. Open-ended funds can be exited as per your convenience.
Before investing in any NFO, it’s important to consider factors like, reputation of the fund house, objectives of the fund, investment theme, minimum investment, investment horizon, market conditions and risk tolerance.
Investment in NFOs can be done through two main routes i.e., the online or offline modes. Some of the common steps involved in this process are
a. Contact an authorised broker.
b. The broker will assist you in choosing a New Fund Offer.
c. Fill up an NFO application form and follow the instructions.
