NFO Update: ICICI Prudential MF to launch Business Cycle Fund

ICICI Prudential Mutual Fund, one of India’s largest mutual fund houses in India, with an asset under management of almost Rs four lakh crore at the end of November, has announced the launch of Business Cycle Fund. It is an open-ended equity scheme, following a business cycle-based investing theme.  

The new fund offer (NFO) opens for subscription on December 29, 2020, and would close on January 12, 2021. The scheme will reopen for the ongoing subscription and redemption within five business days from the date of allotment.  

The scheme’s performance will be benchmarked against Nifty 500 TRI and will fall under the thematic category of SEBI categorisation.   

Objective: The investment objective of the scheme is 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.  

Strategy: The scheme will follow a top-down approach to investing and will invest across market capitalisation. It will start right from monitoring macro indicators both global as well as domestic and will also, identify business cycles. This will be followed by determining suitable themes or sectors as well as selecting stocks within these themes or sectors.  

Fund Manager: The scheme will be managed by Anish Tawakley and Ihab Dalwai. Manish Banthia will be the co-fund manager involved in identifying business cycles. Meanwhile, Priyanka Khandelwal is the dedicated fund manager for overseas investments.   

Our Recommendation:   There are three funds managed by the fund manager. Out of this, only one fund is in existence for more than 3 years i.e. ICICI Prudential Bluechip Fund. The fund has not performed of late. In the last five years, in every trailing period, the fund has underperformed its benchmark. Nevertheless, in seven years, it has outperformed the benchmark as well as its large-cap category.  

 Performance of funds managed by Anish Tawakley  

Going ahead we expect the equity market to remain more volatile as there are many uncertainties around the interest rate direction and stretched valuation of the equity market.  There are opportunities in the market, however, you need to be agile enough to identify that opportunity and act on them. This fund will try to do the same. Hence, investors can invest in this NFO if it matches their risk-return profile.