ICICI Prudential Bharat Consumption Fund Series 4 opens today and closes on 13th August 2018. The fund will be focused on a host of sectors linked to consumption and not just FMCG companies. As the name suggests, it is the fourth in this series. ICICI Prudential Bharat Consumption Fund Series 1 was launched in March and was closely followed by Series 2 and Series 3. The fund will be a close-ended fund with a tenure of 1,300 days (about 3.5 years).
As with its predecessors, the fund relies on India’s demographic dividend and rising incomes to justify its existence. A young and growing middle class will propel purchases of things like cosmetics, cars and mobile data.
ICICI Prudential Bharat Consumption Fund will be required to invest 80-100% of its assets in consumption related sectors. It can invest the balance 0-20% in other types of companies or debt. These sectors include consumer durables and non-durables, healthcare, pharma, auto, telecom, services, media, aviation etc.
The fund will be benchmarked to the Nifty India Consumption Index. As on June 29th, the Index had one-year returns of 15.7% and a five-year CAGR of 16.2%. The index is led by companies like HUL, ITC, Maruti Suzuki, M&M, Asian Paints and Bharti Airtel.
The fund will be managed by Sankaran Naren who is the Chief Investment Officer (CIO) at ICICI Prudential Mutual Fund. It will be co-managed by Rajat Chandak who manages ICICI Prudential Bluechip Fund and several others.
The consumption theme is sufficiently broad to give this fund a wide playing field. It may not restrict investors to a few stocks in the way that other thematic funds do. This is positive.
With regard to close-ended funds, fund managers get the opportunity to focus on returns without worrying about redemptions. On the other hand, their arbitrary time-frames (eg: 3.5 years) can hurt returns if market moves happen too early to too late in relation to the tenure of the fund.
NFO Period: 30th June to 13th August
Fund Managers: Sankaran Naren, Rajat Chandak
Tenure: 1,300 days
Minimum Application Amount: Rs 5,000
Options: Cumulative, Dividend Payout, Dividend Transfer