ICICI Mutual Fund is coming out with a NFO in the form of ICICI Prudential Transportation & Logistics Fund.
ICICI Prudential Transportation & Logistics Fund would be a sectoral mutual fund scheme that would invest in companies involved in the transportation and logistics sector.
The fund would be open for subscription from October 6, 2022 to October 20, 2022.
NFO details for ICICI Transportation & Logistics Fund
Scheme Opens | 06/10/2022 |
Scheme Closes | 20/10/2022 |
Fund Manager | Mr. Harish Bihani Ms. Sharmila D'Mello |
Benchmark | Nifty Transportation & Logistics Index |
Minimum Investment | 5,000 |
Fund Category | Sectoral |
Exit Load | If redeemed/switched within one month from date of allotment – 1% of applicable NAV Nil If redeemed/switched after one month |
ICICI Prudential Transportation & Logistics Fund would be an open ended equity sectoral mutual fund scheme investing in transportation and logistics sector.
ICICI Prudential Transportation & Logistics Fund Investment Objectives
The investment objective of the fund is to generate long term growth by investing largely in equity and equity related instruments of companies involved in the transportation and logistics sector.
There is no guarantee that the investment objectives of the scheme would be achieved.
Additional reading: Click Here to read Why you need a financial plan
ICICI Prudential Transportation & Logistics Fund Allocation
The asset allocation for the fund would be something like this:
Asset Class | Minimum % | Maximum % |
Equity and Equity Related instruments of transportation & companies | 80 | 100 |
Other Equity and Equity Related instruments | 0 | 20 |
Debt and money market instruments | 0 | 20 |
Units issues by REITS and InvITs | 0 | 10 |
What is a Sectoral Mutual Fund?
A Sectoral Mutual Fund as the name suggests invests only in one particular sector.
It is less diversified than a Thematic Mutual Fund since it is restricted to just one particular sector.
Think of Sports as a theme and various disciplines like Football and Basketball like sectors. Sports constitute both Football and Basketball but Football does not constitute Basketball and Basketball does not constitute Football.
In the same manner a Thematic Mutual Fund constitute various sectors but it is not necessary that various sectors fall within the same theme.
Think of a Pharma mutual fund scheme, it can only invest in companies belonging to the pharmaceutical sector.
A nfo means a new fund from a mutual fund house which was not available earlier.
With growing acceptance of mutual funds as a form of investment, mutual fund houses periodically introduce new fund offers so as to complete their basket of investments available for investors.
A NFO is usually what results in the beginning of a mutual fund scheme.
Other reasons being merger of schemes within the same fund house or merger or acquisition of two or more fund houses, these are rare instances though.
NFO meaning
A nfo or a new fund offer is a method by which a mutual fund scheme raises the initial investment into the fund.
The new fund offer is available for purchase for a limited number of days only.
After which it becomes unavailable for fresh purchase or redemption for a couple of days.
Once this time duration is complete, the nfo no more remains a nfo and is treated like any other open ended mutual fund scheme.
In which you can invest and redeem as and when you please, considering it is an open ended fund and you comply with the necessary exit load calculations.
Should you invest in a Sectoral Fund?
If you do, consider the following points before diving in:
Minimal Exposure
A sectoral mutual fund should have limited exposure in your mutual fund portfolio.
It should be a part of your satellite portfolio and never be a part of your core portfolio.
Understanding the sector
Only invest if you do and can understand the sector well.
This involves being able to understand reasons behind past performances as well as the ability to forecast future prospects.
This does not involve investing blindly on past performances.
Long Duration
You should consider a sectoral mutual fund scheme only if you are ready to stay invested for the long haul.
This means staying invested for seven years or more.
This is important since sectors go through various phases and cycles.
You should be able to go through all phases and cycles to make meaningful returns.
Entering the fund
As previously mentioned, sectors go through various phases and cycles.
If you enter a thematic or sectoral mutual fund scheme during a peak,
Should you invest in a nfo?
You can consider it if:
The new fund offer is a category of fund that is not existent in your mutual fund portfolio.
If it is going to be a part of your satellite portfolio.
If it adds a unique touch to your mutual fund portfolio.
If you understand the functioning, objectives and risks attached with the new fund offer.
The nfo mutual fund is aligned with your risk profile.
You should avoid it if:
The new fund offer is not going to add anything of unique significance to your mutual fund portfolio.
If the nfo is going to be a part of your core portfolio.
If the only reason you are investing is due to FOMO (Fear of missing out).
If you do not understand the investment style and risks attached with the nfo.
The nfo mutual fund is not aligned with your risk profile.
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