Before we begin with this fund let us in brief tell you about what an NFO or new fund offer is. For first time subscription of the newly launched fund, AMC or the mutual fund company opens up the NFO for a limited time period. NFO is similar to the IPO or initial public offering i.e. floated in case of a company intending to go public. In most of the cases, during the NFO, the offer price is fixed at Rs. 10, while later after the NFO period expires, investors need to bet on the fund at the prevailing NAV or net asset value.
ICICI Prudential Flexicap Fund: Features
As per the fund manual, ICICI Prudential Flexicap fund is based on the in-house market cap model.
Further the following details give more clarity with respect to the fund:
1. Deployment approach: Equity deployment is through a staggered approach considering the various asset allocation and valuation models.
2. Risk-reward: Moderate as the market cap allocates would be done on a dynamic basis.
3. Stock diversification: Adequate capping on stock concentration
Type of the scheme: Open ended dynamic equity scheme investing across market caps.
Minimum application amount: Rs. 5000 (plus in multiples of Rs. 1)
Minimum additional application amount: Rs. 1000
NFO period: June 28 till July 12, 2021
Entry load: No
Exit load: less than 12 months- 1% of NAV
Fund Manager: Mr. Rajat Chandak
SIP/SWP/STP: Available in the scheme
Benchmark: S&P BSE 500 TRI
Should You Invest in the ICICI Prudential Flexicap NFO?
The prime considerations when investing in the NFO is the funds house standing and ICICI Prudential AMC ranks as the top AMC with the most number of funds i.e. 154 and total assets under management of Rs. 405360 crore. The other consideration is that the fund aims to build up long term wealth for investors.
Furthermore, the mutual fund house shall deploy both top down as well as bottom up approach for finding investment opportunities. There will be periodic re-allocation across market caps as judged by the company's in-house model.
As per the mandate, the flexicap scheme by ICICI Prudential shall invest 65-100% corpus in equity and equity associated securities across market caps; 0-35% in other equity securities; 0-35% in debt securities; units of debt funds as well as money market instruments as well as 0-10% each in units issued by REITs and InvITs. So, this is an unconstrained approach.
This shall be by large into the various sectors and in stocks where there is 3-5 years earnings visibility, management is strong, financial strength.
So, investors on the hunt for a good investment vehicle considering improvement in the nominal GDP can bet on the flexicap fund from ICICI Prudential. The risk-reward trade off can be better here in the flexicap scheme given the flexibility offered.
Benefits of investing in ICICI Prudential Flexicap NFO:
1. Flexicap scheme:
The fund enables investment across the market cap spectrum, thus offering the safety that comes with investment in large caps and high returns that can be offered from small cap and mid-cap exposure.
The fund allows for diversification through varied choices. The fund follows the 'go anywhere' approach for managing the fund that augments exposure to several sectors, themes as well as styles.
3. Risk mitigation:
The fund also has the capability to mitigate the risk associated with investment in large, mid and small caps.
4. Dynamically managed:
At any given time, flexicap scheme can be overwight or underweight across market caps considering the attractiveness. Thus, they tend to perform good in each of the market cycle.
Any retail investor for that matter looking to have equity exposure can do so for the longest time period of say 3,5 or 10 years. This is because equity markets are currently going through a broad based rally and the momentum is likely to continue given the inflaitonory pressure wherein equities tend to perform better. Furthermore, world over liquidity is also propping up the equities markets.
Also, the fund can be a suitable bet for all those investors who now want to divert their portfolio from pure fixed income assets.