ICICI Prudential Bharat Consumption Fund Series 3 opened for subscription on 27th June and will close on 11th July. It is a 3.5-year close-ended fund and a part of the Bharat Consumption series. You can read our review of Series 1 and Series 2 which were both launched in April 2018. They have delivered -1.5% and -1% since inception but it is too soon to conclude anything about them.
This scheme will invest 80-100% of its assets in consumption stocks and the rest in other types of companies or debt. It will have a tenure of 1,300 days which is roughly 3.5 years.
The fund’s investment case rests on demographics and rising incomes. It notes that at least 65% of India’s population is below 35 years of age leaving the country well positioned to reap the benefits of a demographic dividend. In addition, India’s robust growth and rising incomes are expected to lift consumption spending to $4 trillion by 2025.
The scheme will invest in sectors such as consumer durables and nondurables, healthcare, auto, telecom and services to benefit from India’s consumption. ICICI Bharat Consumption Fund Series I has Maruti Suzuki, Tata Motors, ITC, Titan and Motherson Sumi as its top five picks. It is tilted strongly towards autos. ICICI Prudential Bharat Consumption Series II has Titan, Jubilant Foodworks, Bharti Airtel, Sun Pharma and United Spirits as its top 5. It has a greater allocation towards healthcare and communication. The fund will be benchmarked against the Nifty India Consumption Index. The benchmark has delivered 16.72% over the five years ending on March 28th, 2018.
ICICI Prudential Bharat Consumption Fund Series 3 will be managed by Sankaran Naren who is the Chief Investment Officer (Equities) at ICICI Prudential and Atul Patel who manages various ICICI schemes including ICICI Prudential Small Cap Fund. Priyanka Khandelwal will manage any international exposure the scheme might take.
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 a 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: 27th June to 11th July
Benchmark: Nifty Consumption Index
Fund Managers: Sankaran Naren and Atul Patel
Minimum Investment: Rs 5,000
Options: Growth, Dividend Payout, Dividend Transfer
Tenure: 1,300 days