ICICI Mutual Fund has launched Business Cycles Fund that would open for subscription on 29th December 2020. This is an open ended equity scheme that focuses on riding business cycles through dynamic allocation between various sectors and stocks at different stages of business cycles. Should you invest in ICICI Prudential Business Cycles Fund NFO? What are the various risk factors associated with such funds?
ICICI Prudential Business Cycles Fund (NFO) Issue Details
ICICI Prudential had earlier issued Business Cycles Fund Series 1, Series 2 and Series 3 and they were close ended MF schemes. This time it has come up with open ended mutual fund scheme. Here are the NFO details.
|ICICI Pru Business Cycles Fund – NFO Issue Details|
|Scheme reopens for continous purchase/sale||In 5 working days|
|Minimum investment (Lumpsump)||Rs 5,000|
|Minimum investment (SIP)||Rs 100 for 6 months|
|NAV of the fund||Rs 10 during NFO period|
|Exit Load||1% of exited within 1 year|
|Max Total expense Ratio (TER)||2.25%|
|Benchmark||Nifty 500 TRI|
|Fund Manager||Mr. Anish Tawakley
Mr. Ihab Dalwai
What is the investment objective of this MF scheme?
To generate long-term capital appreciation by investing with a focus on riding business cycles through allocation between sectors and stocks at different stages of business cycles.
There is no assurance or guarantee that the investment objective of the scheme will be realized.
What is the allocation pattern in this mutual fund?
This fund investment pattern is as follows:
|Type of instruments||Min %||Max %||Risk Profile|
|Equity and equity related instruments selected on the basis of business cycle||80%||100%||High|
|Other equity and equity related instruments||0%||20%||Medium to High|
|Debt and Money market instruments, including Units of Debt oriented mutual fund schemes||0%||20%||Low to Medium|
|Preference shares or any other asset as may be permitted by SEBI from time to time||0%||20%||Medium to High|
|Units issued by REITs and InvITs||0%||10%||Medium to High|
Why to invest in the ICICI Prudential Business Cycles Fund?
Here are a few reasons to invest in such mutual fund schemes.
1) The MF invests in opportunities that arises during different stages of business cycles in the Indian economy. These are unique opportunities where such mutual funds can benefit.
2) This fund also aims to tap such special opportunities arising through various business cycles that are existing post covid-19 as there are no restrictions either on market cap nor sector.
Some key risk factors you should consider before you invest in such funds
One should consider some of these risk factors / negative factors before investing.
1) It invests in opportunities arising out of various stages in business cycles. This would limit the capability of the fund to invest in other themes / sectors.
2) It invests based on opportunities arising out of various stages of business cycles that could be high in one period and lower in another period. The returns could highly fluctuate.
3) Since this scheme invests in specific opportunities for companies in special situations, concentration risk is very high.
4) It invests in REITS and InvITs which are considered as high risk.
5) You can refer complete risk factors of investing in this particular.
Performance of existing Business Cycles Funds
Currently there is only one fund in this category, let us check the performance of such funds.
|Fund Name||6 Months||1 Year||3 Years||5 Years|
|L&T Business Cycles Fund||35.7%||10.1%||-0.2%||8.3%|
ICICI Prudential Business Cycles Fund – Should you invest?
ICICI Prudential Business Cycles Fund invests based on a business cycle’s theme. Such opportunities could be high post covid-19 and there could be a limited number of opportunities in future. The returns can significantly fluctuate year on year. High risk investors who are willing to invest for at least 5 years time frame can invest in such funds. Moderate to low risk takers should stay away from such funds.
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