Equity is high risk-high return game. Debt gives low returns, but these are stable. Returns from gold fluctuates and not stable. Investments in global equity performs well in medium to long term. ICICI Prudential has launched a passive multi asset fund that invests in all these investment options. ICICI Prudential Passive Multi Asset Fund opens for subscription on 27 December, 2021. Multi asset mutual funds generally invest in investment classes like equity, debt and gold. This ICICI Pru Passive Multi Asset Fund invests in overseas investments too. Should you invest in ICICI Prudential Passive Multi-Asset Fund of Funds NFO? What are the various risk factors associated with such funds?
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ICICI Prudential Passive Multi-Asset FoF – NFO issue details
Here are the NFO issue details.
| Scheme Opens | 27-Dec-21 |
| Scheme Closes | 10-Jan-22 |
| Scheme reopens for continuous purchase / sale | Within 5 business days |
| Minimum Lumpsum | ₹ 1,000 |
| Minimum SIP | ₹ 100 for 6 months |
| NAV of the fund | ₹ 10 during NFO period |
| Entry Load | Nil |
| Exit Load | 1% if reedeemed within 1 year |
| Risk | Very High Risk |
| Benchmark | CRISIL Hybrid 50+50- Moderate Index (80% weightage) + S&P Global 1200 Index (15% weightage) + Domestic Gold Price (5% weightage) |
| Fund Manager | Mr. Sankaran Naren |
| Max TER | 1.00% |
ICICI Prudential Passive Multi-Asset Fund of Funds SID
What is the investment objective of this MF scheme?
ICICI Prudential Passive Multi-Asset Fund of Funds is a Fund of Fund scheme with the primary objective to generate returns by predominantly investing in passively managed funds launched in India and/or overseas.
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 |
|---|---|---|---|
| Units of mutual fund schemes as stated below: |
95% | 100% | High |
| A) Domestic Equity ETFs/Index Funds | 25% | 65% | High |
| B) Domestic Debt ETFs/Index Funds | 25% | 65% | Low to Medium |
| C) ETFs/Index Funds investing in Overseas securities |
10% | 30% | Medium to High |
| D) Domestic Gold ETFs | 0% | 15% | Medium to High |
| Reverse Repo, Tri-Party Repo, Units of Debt oriented mutual fund schemes | 0% | 5% | Low to Medium |
How these asset classes performed year on year in the last 10 years?
The below chart depicts which asset class out-performed year on year in the last 10 years.
Why to invest in ICICI Prudential Passive Multi-Asset Fund of Funds?
Here are a few reasons to invest in such mutual fund schemes.
1) This fund would invest in all 3 assets classes, i.e. Equity (domestic and overseas), debt and gold. Asset classes would follow different cycles over different periods, hence investing in such a combination would help to get optimal returns.
2) This fund invests in multi assets i.e. Equity, debt and gold. Domestic equity aims to generate capital appreciation through the India growth story. Debt aims to generate stable returns in the medium to long term. Gold can act as a potential hedge against inflation. Global equity can help in providing diversification benefits and help to invest in mega trends. Such diversified portfolio can help to get high returns in the medium to long term.
3) The portfolio has an innovative range of global exchange traded funds (ETFs).
4) This portfolio aims to generate better risk adjusted returns.
Risk Factors in ICICI Prudential Passive Multi-Asset Fund of Funds
One should consider some of these risk factors / negative factors before investing.
1) If an investor wants to invest separately in such asset classes, they can pick-up right equity mutual funds or debt mutual funds or gold investment options or international funds. In case of multi asset fund, the investor has to depend on just one fund and cannot pick-up any quality funds from various asset class categories.
2) These funds are taxed as debt funds if their equity allocations do not meet the 65% limit, with STCG being taxed at the investor tax slab rate and LTCG being taxed at 20% with benefits of indexation.
3) This fund invests in ETFs where there could be tracking error risk.
4) Since it invests in debt funds, these would have interest rate risks, default risks and reinvestment risks.
5) It would invest in global equity where there is geopolitical risks and currency risk.
6) You can refer complete risk factors of investing in this particular scheme in SID / KIM / NFO prospectus.
Performance of existing Multi Asset Funds in India
Now, let us look at some of the best performing Multi Asset Funds in India. These top multi asset funds gave 9.8% to 18.6% annualized returns in the last 5 years. Returns above 1 year are annualized.
| Scheme Name | 1 Year | 3 Yrs | 5 Yrs |
|---|---|---|---|
| Quant Multi Asset Fund | 57.4% | 30.2% | 18.6% |
| Axis Triple Advantage Fund | 26.2% | 20.2% | 16.0% |
| ICICI Prudential Multi-Asset Fund | 34.5% | 18.0% | 15.7% |
| HDFC Multi-Asset Fund | 21.0% | 17.3% | 12.2% |
| Navi 3 in 1 Fund | 23.6% | 15.5% | 12.0% |
| SBI Multi Asset Allocation Fund | 14.8% | 13.8% | 10.8% |
| UTI Multi Asset Fund | 13.2% | 10.3% | 9.8% |
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ICICI Prudential Passive Multi-Asset Fund of Funds – Should you subscribe?
ICICI Prudential already have multi asset fund, however modifying the investment objective (to align to the new fund strategy), could be little challenging, hence they would have come up with another multi asset fund to invest overseas equities too.
ICICI Prudential Passive Multi-Asset Fund of Funds invests in multi asset class, i.e. equity (domestic and overseas), debt and gold. As indicated earlier, while I am not against such multi asset funds, such funds would provide minimum scope for investors to play with equity or debt or gold individually. Instead, one can pick individual mutual funds from such asset classes and if they are not happy, they can always exit and invest in better quality funds from such asset classes. If you still want to proceed with such investment strategy and test with new funds, you can consider this fund. Alternatively, you can pick-up some of the top performing multi asset funds indicated above.
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