NFO alert: ICICI Prudential MF's passive funds, Aditya Birla's new target fund in focus

ICICI Prudential Mutual Fund has come up with two new fund offers (NFO): ICICI Prudential Nifty200 Value 30 ETF and ICICI Prudential Nifty200 Value 30 Index Fund. Both are now open for subscription. The subscription will close on October 14, 2024.

The new funds are categorised as smart beta funds, utilising a factor-based strategy to offer investors a cost-effective, value-oriented investment methodology. These funds consist of an Exchange Traded Fund (ETF) and an Index Fund, both designed to mirror the Nifty200 Value 30 Index. This index includes 30 stocks carefully chosen from the Nifty 200 Index using a 'Value Score' criteria.

Based on historical data, the Nifty 200 Value 30 Total Return Index (TRI) has outperformed the broader Nifty 200 TRI in six of the past ten years. As of August 30, 2024, the index had substantial exposure to sectors such as financial services, oil, gas & consumable fuels, metals & mining, and power. The index is rebalanced twice a year to reflect market trends and valuation principles.

“At a time when investors are seeking diversified strategies for long-term growth, value investing remains a crucial component of a well-rounded portfolio. We are excited to introduce the Nifty200 Value 30 ETF and Index Fund, offering investors a targeted approach to value-based investing, which is designed to provide growth over the long term,” said Chintan Haria, Principal – Investment Strategy at ICICI Prudential AMC.

Top points

• ICICI Prudential Nifty200 Value 30 ETF

Scheme Objective: The scheme aims to mirror the total return of the underlying index, with returns before expenses closely matching that of the index, despite potential tracking errors. However, there is no guarantee that the scheme will achieve its investment objective.

Scheme Type: This scheme is open-ended.

Scheme Category: The scheme falls under the category of Other ETFs.

New Fund Launch Date: The new fund is scheduled to launch on September 30, 2024.

Minimum Investment: Investors can participate in the new fund offer (NFO) period with a minimum investment of approximately ~100, with additional investments accepted in multiples of ~1.

Exit load: Nil

• ICICI Prudential Nifty200 Value 30 Index Fund

Scheme Objective: The scheme aims to invest in companies listed in the Nifty200 Value 30 Index with the goal of replicating the returns of the index while allowing for tracking errors. The scheme will invest in all stocks included in the Nifty200 Value 30 Index, following the same weightage as the index. However, the scheme offers no guarantee of achieving its investment objective.

Scheme Details:

Scheme Type: Open Ended
Scheme Category: Other Scheme - Index Funds
New Fund Launch Date: September 30, 2024
Minimum Investment: Investors can participate with as little as ~100 during the NFO period, with additional investments in multiples of ~1.
Exit load: Nil

The schemes are well positioned to adapt to current market conditions. For instance, the index allocation was overweight in financial services in 2023 and 2024 due to the higher value score of the sector's stocks. Midcap stocks held more value in 2022, while the exposure to midcap stocks was at its lowest in the past five years in 2019. However, one should consult their investment guides before investing.

Aditya Birla Sun Life CRISIL-IBX AAA NBFC-HFC Index-Sep 2026 Fund

Aditya Birla Sun Life Asset Management Company Limited (ABSLAMC) recently introduced the innovative Aditya Birla Sun Life CRISIL-IBX AAA NBFC-HFC Index-Sep 2026 Fund. This fund is specifically designed to target investments in the prominent Non-Banking Financial Companies (NBFCs) and Housing Finance Companies (HFCs) in India.

The subscription opened on September 30, 2024, and will close on October 7, 2024. The fund will implement a 'buy and hold' strategy. It will undergo semi-annual rebalancing in April and October until its culmination on September 30, 2026, unless any bonds are deemed ineligible during the tenure.

The investment approach adopted by this fund provides investors with a systematic and structured avenue for long-term investment within the resilient NBFC and HFC sectors. The fund aims to remain adaptable to the dynamic market conditions, ensuring it evolves with changing circumstances.

An intriguing aspect of this fund is its flexibility in responding to market trends. For instance, the index's composition reflected an overweight position in financial services in both 2023 and 2024 due to the sector's higher value score. Conversely, midcap stocks held greater value in 2022, while exposure to midcap stocks was at its lowest in 2019 compared to the last five years.

“Securities with this rating (AAA rating) are considered to have the highest degree of safety regarding timely servicing of financial obligations. Such securities carry the lowest credit risk,” says CRISIL ratings.

Top features

Investment Scheme Objective:

The scheme aims to replicate the total returns of the securities represented by the CRISIL-IBX AAA NBFC-HFC Index – Sep 2026, before expenses, with a focus on minimizing tracking errors.

Fund Allocation:

The fund will allocate 95-100% in instruments included in the CRISIL-IBX AAA NBFC-HFC Index – Sep 2026, and 0-5% in debt and money market instruments (including cash and cash equivalents).

Risk Profile:

The fund is characterized by moderate interest rate risk and relatively low credit risk, as per the fund house assessment. Investors with a horizon of 3 to 24 months seeking a passive debt option may find this fund suitable.
 
Scheme type: Open Ended
 
Scheme category: Other Scheme - Index Funds
 
Fund manager: It will be managed by Harshil Suvarnkar and Vighnesh Gupta. 
 
“In an environment where stability and quality are paramount, the target maturity fund investing in India’s top NBFCs & HFCs offers a robust investment opportunity. Corporate bond yields and liquidity are notably well-balanced at the 2 and 3-year maturities, offering a timely investment opportunity,” said A Balasubramanian, Managing Director & CEO of Aditya Birla Sun Life AMC Ltd.