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on the NFO of ICICI Prudential Business Cycle Fund:
I have tried to summarize the details put forth by various communications received from AMC with respect to this scheme and have added my take on this NFO.
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on the NFO of ICICI Prudential Business Cycle Fund:I have tried to summarize the details put forth by various communications received from AMC with respect to this scheme and have added my take on this NFO.
Do "Re-tweet" so max people can see
ICICI Prudential Business Cycle Fund is an Open-ended equity-oriented scheme that will invest predominantly in equity related instruments, Here is the allocation pattern of the scheme as shown in SID:
Scheme Category: Equity - Thematic
Objective: To generate long term capital appreciation by taking advantage of business cycles in the economy. Thus it can be seen that the scheme will invest in cyclical companies that may benefit from the current economic scenario.
Objective: To generate long term capital appreciation by taking advantage of business cycles in the economy. Thus it can be seen that the scheme will invest in cyclical companies that may benefit from the current economic scenario.
The scheme will follow a Top-Down approach where the macros of the economy are given preference over the micro factors. Macro factors could be: Interest rate scenario, Inflation, Fiscal stimulus, etc.
Eg: The scheme will be investing in the infrastructure and banking sector during the current scenario due to lower interest rates and ample availability of liquidity.
Whereas if the situation were to reverse and we were to go into a recession period then it would shift the exposure to defensives like Pharma and FMCG sector.
The scheme will be investing across market caps and is not limited to a particular theme like Pharma or IT etc. It will reshuffle the portfolio depending upon the macro factors in the economy.
A snap of business cycles that various sectors go through:
A snap of business cycles that various sectors go through:
Here is an illustration of the identification of the business cycle:
Parameters set by the scheme for its stock selection process:
Going by the information provided by the AMC, It seems that major exposure would be towards Infrastructure, Banking, and Metals.
From an overall perspective, Fund house wants to convey that cyclicals will outperform in high growth and low-interest-rate phase (current scenario) & defensives will do good in recession & scheme has the flexibility to move its allocation to any sector depending upon the cycle.
Details of investment mandate:
-Scheme can invest in overseas equities.
-Scheme has covered call strategy enabled.
-Scheme can take exposure to REIT & INVITs
-Derivatives exposure to index and stocks is allowed within certain limits.
-Scheme can invest in overseas equities.
-Scheme has covered call strategy enabled.
-Scheme can take exposure to REIT & INVITs
-Derivatives exposure to index and stocks is allowed within certain limits.
Benchmark: NIFTY 500 TRI
Fund Managers: Mr. Ashish Tawakley (also manages ICICI Bluechip Fund), Mr. Ihab Dalwai (also manages ICICI BAF), Mr. Manish Bhantia (co fund manager) & Ms. Priyanka Khandelwal (overseas exposure)
Fund Managers: Mr. Ashish Tawakley (also manages ICICI Bluechip Fund), Mr. Ihab Dalwai (also manages ICICI BAF), Mr. Manish Bhantia (co fund manager) & Ms. Priyanka Khandelwal (overseas exposure)
Comparable scheme and performance: L&T Business Cycle fund is the comparable scheme for this NFO and here is the performance snapshot of the scheme
The scheme was launched in mid-2014 and it has not been able to beat its benchmark since its inception to date.
The scheme was launched in mid-2014 and it has not been able to beat its benchmark since its inception to date.
NFO Dates: 29 December 2020 - 12 January 2021
Minimum amount:
- Rs. 5000 (Lumpsum)
- Rs. 100 (SIP)
Minimum amount:
- Rs. 5000 (Lumpsum)
- Rs. 100 (SIP)
My take on NFO:
ICICI AMC as a whole along with their schemes have been following a value investing approach. This particular fund may also have similar companies that have been value bets for quite some time however they have not appreciated well in price.
ICICI AMC as a whole along with their schemes have been following a value investing approach. This particular fund may also have similar companies that have been value bets for quite some time however they have not appreciated well in price.
It is tough to gauge & shift sectors at the right time & which is very important for this scheme as it will have to continuously ensure that the current theme followed by the scheme is valid. The comparable fund mentioned above has followed a similar strategy & hasn't done well.
However, ICICI has been on the better side of calling out the macro factors right, and hence it might surprise us.
An investor who has a longer-term horizon (at least 7 years) to stay invested to sail through various cycles may take a look at this scheme,
An investor who has a longer-term horizon (at least 7 years) to stay invested to sail through various cycles may take a look at this scheme,
However, for a novice or new investor, this doesn't seem to be a better proposition as of now.
I would wait and watch this scheme closely maybe for 2-4 quarters to see how the actual portfolio turns out.
END.
I would wait and watch this scheme closely maybe for 2-4 quarters to see how the actual portfolio turns out.
END.
