ICICI Pru Transportation and Logistics Fund (NFO) – Would this fund benefit from National Logistics Policy?

ICICI Prudential Mutual Funds has launched Transportation and Logistics Fund (new fund offer). This NFO would open for subscription on 6th October, 2022. This mutual fund scheme would invest majorly in companies that are from the transportation and logistics segment. Govt of India has brought logistics policy recently which would push this sector massively in coming years. Should you invest in ICICI Prudential Transportation and Logistics Fund NFO?  What are the various risk factors associated with such funds?

Also Read: Best Mutual Fund Scheme with highest SIP returns in 5 years

ICICI Prudential Transportation and Logistics Fund (NFO) – Issue details.

ICICI Prudential Transportation and Logistics Fund is an open-ended equity scheme that invests in transportation and logistics sectors.

Scheme Opens 06-Oct-22
Scheme Closes 20-Oct-22
Scheme reopens for continuous purchase/sale Within 5 working days
Minimum Lumpsum Rs 1,000
Minimum SIP Rs 1,000 for 6 months
NAV of the fund Rs 10 during NFO period
Entry Load Nil
Exit Load 1% if exited within 1 month
Risk Very High Risk
Benchmark Nifty Transportation & Logistics TRI
Fund Manager Mr. Harish Bihani
Ms. Sharmila D’mello
Max TER 2.25%

ICICI Prudential Transportation and Logistics Fund SID

What is the investment objective of this MF scheme?

The objective of the scheme is to generate long term capital appreciation by investing predominantly in equity and equity related securities of companies engaged in transportation and logistics sectors.

ICICI Pru Transportation and Logistics Fund NFO – Quick Review

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 invests pattern is as follows:

Type of instruments Min % Max % Risk Profile
Equity & Equity related securities of
entities in the transportation and logistics theme
80% 100% Very High
Other Equity & Equity related instruments 0% 20% Very High
Debt and Money Market Securities 0% 20% Low to Medium
Units issued by REITs and InvITs 0% 10% Very High

Why there is focus now on transportation and logistics sector now?

There are a couple of new mutual fund schemes being floated now in this segment. You might be wondering the reasons behind this.

Few days back, the National Logistics Policy was launched by Prime Minister Mr Narendra Modi which is the logical next step to provide a comprehensive agenda to develop the entire logistics ecosystem with 2 major visions.

First step is to reduce logistics cost in India by 5% of GDP over the next 5 years.

Second step is to improve India’s ranking in the Logistics Performance Index (LPI). It also aims to enhance logistics sector competitiveness through a unified policy environment and an integrated institutional mechanism.

The policy seeks to pave the way for India to become a logistics hub by providing seamlessly integrated multiple modes of transportation by leveraging technology, processes and skilled manpower.

Performance of existing transportation and logistics funds

There is only existing fund in this sector, which is UTI Transport and Logistics Fund. Here is the performance of the fund (direct plan).

  • Last 7 years annualized returns – 10%
  • Last 5 years annualized returns – 7.5%
  • Last 3 years annualized returns – 21%
  • Last 1 years annualized returns – 27%

In fact the majority of the last 1 year returns indicated above in the last 3 months after the logistic policy has been discussed.

Why to invest in this NFO?

Transportation and logistics sector is expected to boom in the coming years with Govt of India National Logistic Policy which was announced a few days back. Mutual fund schemes that invests in companies that are part of transport and logistics would benefit.

Risk factors in such funds

One should consider some of these risk factors / negative factors before investing.

1) Since this fund invests only in a single sector, it is classified as a sector fund. Any down trend in this segment can impact the mutual fund.

2) While there is push from government on new logistics policy, we do not know how successful this initiative would be in coming years.

3) You can refer complete risk factors of investing in this scheme to SID / KIM / NFO prospectus.

Also Read: Best Mutual Funds with highest SIP returns in 10 years

ICICI Pru Transportation and Logistics Fund NFO – Should you invest?

This fund invests in companies that are part of the transportation and logistics sector. Govt of India national logistics policy is expected to boost this segment in coming years.

On the other hand, this mutual fund invests in single sector and high risk. Any down trend in this sector in coming years can impact the fund performance.

High risk investors can invest in such funds or in an existing fund for 3-5 year timeframe. If you are looking for long term perspective, better to invest in a diversified portfolio of mutual funds and avoid this fund.

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Suresh KP

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