ICICI Pru Bharat Consumption Fund – Series 3 – Should you invest?

ICICI Prudential Bharat Consumption Fund – Series 3 - Should you invest-minICICI Prudential Bharat Consumption Fund – Series 3 Review


There are flood of New Fund Offers to tap new investment opportunities in India. ICICI Pru Bharat Consumption Fund Series 3 has opened for subscription on 27th June, 2018. This new mutual fund scheme would tap the opportunities from consumption theme. While there are several mutual fund schemes in the consumption sector already, new fund offer is still trying to attract investors. Series 1 and 2 already came in April/May and tapped over Rs 800 Crores. Should you invest in the ICICI Prudential Bharat Consumption Fund – Series 3? What are the risk factors an investor need to consider before investing in this ICICI Prudential Bharat Consumption Fund – Series 3 New Fund Offer (NFO)?

Also Read: 15 Best SIP Mutual Funds to invest in 2018

Features of ICICI Prudential Bharat Consumption Fund – Series 3


This is a close ended mutual fund scheme which invests in sectors that can benefit from the consumption theme like Consumer Non-Durables, Consumer Durables, Auto, Healthcare Services, etc.  

This scheme would open for subscription on 27th June, 2018.

This scheme closed for subscription on 11th July, 2018.

This is close ended mutual fund scheme, hence it would not reopen for subscription further.

This scheme would close and mature in 3.5 years  / 1,300 days.

This scheme is available in both regular and direct plans.

Like any other MF scheme, each such plan offers both dividend and growth options. Under the dividend option regular dividends would be paid.

This scheme is available for lump sum only. No SIP option available.

Minimum investment is Rs 5,000 and in multiples of Rs 10 thereof.

There is no maximum amount of investment.

The NAV of the NFO is Rs 10 per unit now.

This scheme is classified as high risk scheme.

This scheme benchmark is a NIFTY India Consumer Index.

Scheme expense ratio is estimated up to 2.5% of the total assets on any day.

Who is the Fund Manager of ICICI Prudential Bharat Consumption Fund – Series 3 NFO?


The Fund Managers are Mr. Sankaran Naren and Mr. Atul Patel. Ms. Priyanka Khandelwal would act as fund manager for investment in Overseas securities.

What is the investment objective and strategy of this ICICI Prudential Bharat Consumption Fund – Series 3?


The investment objective of the Scheme is to provide capital appreciation by investing predominantly in equity and equity related instruments of sectors that could benefit from growth in consumption and related activities. However, there can be no assurance or guarantee that the investment objective of the Scheme would be achieved.

What is the allocation pattern in this mutual fund scheme?


This fund investment pattern looks as follows:

1) It invests 80% to 100% in Equity and Equity, Related Instruments of companies that could benefit from consumption and related activities and are part of sectors in the benchmark index. This risk profile in this segment is high.

2) It invests 0% to 20% in Equity and Equity Related Instruments of companies other than the ones that could benefit from consumption and related activities. This risk profile in this segment is Medium to high.

3) It invests 0% to 20% in Debt and Money Market Instruments. This risk profile in this segment is low to medium.

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Where would the mutual fund scheme invest?


a) Scheme would focus on consumption theme and invests in Equity and equity related securities, including warrants carrying the right to obtain equity shares.

b) Securities created and issued by the Central and State Governments and/or repos/reverse repos in such Government Securities as may be permitted by RBI (including but not limited to coupon bearing bonds, zero coupon bonds and treasury bills)

c) Securities guaranteed by the Central and State Governments (including but not limited to coupon bearing bonds, zero coupon bonds and treasury bills)

d) Debt securities issued by domestic Government agencies and statutory bodies, which may or may not carry a Central/State Government guarantee

e) Corporate debt securities (of both public and private sector undertakings)

f) Securities issued by banks (both public and private sector) as permitted by SEBI from time to time and development financial institutions

g) Money market instruments as permitted by SEBI/RBI

h) Non-convertible part of convertible securities

i) Securitised Debt

j) Any other domestic fixed income securities as permitted by RBI/ SEBI

k) Derivative instruments like Stock / Index Futures, Stock / Index Options and such other derivative instruments permitted by SEBI.

l) ADRs / GDRs / Foreign Debt Securities as permitted by Reserve Bank of India and Securities and Exchange Board of India

M) Units of Mutual Fund Schemes, subject to applicable guidelines.

The Scheme intends to invest predominantly in Equities and Equity Related Securities of companies that are likely to benefit directly or indirectly from consumption and related activities. Such companies may directly or indirectly benefit from increase in consumption led demand. Illustrative list of such sectors are as under:

1. Consumer Durables

2. Consumer Non-Durables

3. Healthcare

4. Pharmaceuticals

5. Auto

6. Auto Ancillaries

7. Telecom

8. Services

9. Media & Entertainment

10. Aviation

11. Textiles

12. Fertilisers and Pesticides

13. Retailing

Can NRI invest in this MF scheme?


Yes, they can invest in this scheme.

What are the risks involved in this fund?


One should consider some of these risk factors before investing.

1) This scheme invests few sectors that are part of consumption and hence there is risk.

2) This is close ended mutual fund scheme which closes in 3.5 years and one cannot expect higher returns in such short term equity funds. One should invest in funds for the long term.

3) Since this is close ended mutual fund scheme, one cannot redeem with mutual fund AMC before maturity date. One need to sell them on the stock exchange and the price might be trading at discounted price.

How is the Performance of the Mutual Funds which are in consumption theme?


Currently there are existing mutual fund schemes which are investing gin consumption theme.

1) Tata India Consumption Fund: This fund gave 27% returns in the last 1 year and 6% returns in the last 6 months.

2) Reliance ETF Consumption Fund: This fund gave 14% annualized returns in the last 3 years, 17% returns in the last 1 year and 6% returns in the last 6 months.

3) Mirae Asset Great Consumption Fund: This fund gave 21% annualised returns in the last 5 years, 14% annualized returns in the last 3 years, 16% returns in the last 1 year and 4% returns in the last 6 months.

Also Read: Top 5 Best Midcap Mutual Funds to invest now

Should you invest in the ICICI Prudential Bharat Consumption Fund – Series 3?


Consumption had been one of the best performing themes over the last one year with the Nifty India Consumption Index giving a return of 20%. Given the uncertainty over trade wars, surging oil prices, rising interest rates in the US and the forthcoming general elections, fund managers believe it would be safe to focus on companies where there is higher earnings visibility. Fund managers expect sectors like auto, health care, consumer durables to benefit from the growth in Indian middle class population, nuclear families and low rural penetration. Hence, Consumption theme is catching attention of many fund managers owing to good opportunities available now. However, ICICI Pru Bharat consumption fund is close ended scheme. There is a higher risk element if the investment objectives are not met within 3.5 years. One cannot wait more than this period (it closes in 3.5 years) if the fund has not performed well in this period. I would personally like to invest in open ended schemes instead of close ended scheme, especially in such specific equity theme based fund. Investors should consider all these risks before investing in this fund.

ICICI Prudential Bharat Consumption Fund – Series 3 NFO details can be downloaded from here.

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Suresh

ICICI Prudential Bharat Consumption Fund – Series 3 NFO – Should you invest

The Author

Suresh KP

Suresh KP i.e. me have written 1,800+ articles on this blog. I have done by B.Com from Osmania University and then MBA-Finance from Symbiosis University, Pune. I have over 20 years of experience in analyzing various investment options and money saving ideas. I love doing financial planning, Mutual Fund Analysis, Searching long term Stocks for wealth creation, IPOs, reviewing Insurance Products, analysing Health insurance Plans etc.

2 Comments

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  1. dear sir,

    many thanks for your work.

    but according to icici pru mf online no growth option is available only cumulative & div. option is available.

    they are telling that growth & cumulative option is the same thing.

    so i am confused and need a detail clarification.

    looking for your early reply.

    1. YES both are same. Under growth, your amount would be paid on maturity/when you sell. For dividend option, the returns are declared by mutual fund scheme and you would get payments on regular basis

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