ICICI Prudential Asset Management Company has launched ICICI Prudential US Bluechip Equity Fund—an open ended equity scheme. The Fund is a diversified equity fund investing in bluechip companies listed on the New York Stock Exchange (NYSE) and NASDAQ stock exchanges based in the US.
Speaking at the launch of the Fund, Nimesh Shah, MD & CEO, ICICI Prudential AMC said, “Over the past five years, 100% of our schemes have beaten their benchmark against which they have been managed in India. The US Bluechip Equity Fund is designed for Indian investors and not the US investors. It allows the Indian investors to hold US dollars in their portfolio.”
Sankaran Naren, Chief Investment Officer-Equity, ICICI Prudential AMC, emphasised that investors need to be patient while investing in mutual funds. “One has to have a long-term horizon for investing in US Bluechip Equity to beat inflation. Indian investors could potentially benefit from investing in the US Bluechip Equity Fund as it offers diversification by investing in a low correlated market while offering an exposure to global currency i.e. the US dollar. The Indian investors would get direct access to the global brands, which benefit from a global business and consumption. The US economic performance may also benefit the investors,” he said.
Himanshu Pandya, Vice President & Head-Product Development & Delivery at ICICI Prudential AMC, said, “The US Bluechip Equity Fund will invest in 20-25 business companies of the US. The Fund will invest in companies that have a strong competitive advantage. It also aims to provide value preservation or purchasing power to Indian investors in US dollar terms.”
He added, “Indian investors should invest in developed markets. Over the past 10 years, the correlation between Nifty and S&P 500 is very low (0.23) which signifies potential diversification benefits to Indian investors.”
When asked whether the decline in US dollar would affect the fund returns, Mr Pandya said, “Investors need to have a long-term horizon for investing in the Fund. The return on the Fund will be equal to return on underlying asset and return generated by US dollar. Over the period of three to five years, the material contributor for return on the Fund would be the underlying asset and not the US dollar.”
Speaking about the taxation on the Fund, Mr Pandya explained, “The Fund will bear a tax which is similar to fixed income fund. The dividend option in the Fund will attract dividend distribution tax. If the Fund is redeemed within one year, then it will attract short term capital gains which will be added to the income. If the Fund is redeemed after one year, it will attract long term capital gain of 10% without indexation and 20% with indexation.”
Launch date: The new fund offer (NFO) opens on 18th June and closes on 2nd July. The scheme re-opens for continuous sale and repurchase on 9th July.
Investment objective: The Fund aims to provide long-term capital appreciation to investors by primarily investing in equity and equity-related securities of companies listed on NYSE and NASDAQ. The Fund will also invest in American depositary receipts /global depositary receipts issued by Indian and foreign companies. The Fund will not have any exposure to equity and equity related securities issued by Indian companies except for ADRs/GDRs issued by Indian companies. NRIs (non-resident Indians) can invest in the Fund, except US NRIs.
Asset allocation: The Fund will invest 65%-100% in shares of US equity. It may also invest up to 35% of its corpus in fixed income securities of India as well as US.
Benchmark: The performance of the Fund will be benchmarked against S&P 500 Index which focuses on the large cap segment of the US market, with approximately 75% coverage of US equities. The top 75% of the total listed market capitalisation on the US exchanges comprise bluechip companies. The market capitalisation of such companies is approximately $4 billion.
Investment amount: The minimum investment amount is Rs. 5,000 and the minimum additional investment amount is Rs. 1,000. The units will have face value of Rs. 10 each. The unit holders of the Fund can start an SIP (systematic investment plan) of minimum Rs. 1,000 for a continuous period. The purchase and redemption of the Fund will be in rupees.
According to the AMC, the Fund will allow Indian investors to access the world’s largest and most prominent market and brands therein. The ICICI Pru US Bluechip Equity Fund will give an opportunity to the Indian investors to diversify their portfolio by investing in companies in the US representing more than 33% of the world market capitalisation. Additionally, this Fund provides an opportunity to Indian investors to sectors like semiconductor, defense and aerospace which may not be available in India.
Risk factors: The value of the Scheme’s investments may be affected by factors such as price and volume volatility in the capital markets, interest rates, currency exchange rates, changes in government policies, taxation laws and other political and economic developments.
ICICI Pru AMC has tied up with Morningstar Equity Research Services MERS for research services. The AMC intends to benefit from MERS’s expertise and disciplined research approach. The fees related to these services would be borne by the AMC and would not be charged to the Fund. The fund management of the scheme shall rest with the AMC.
Fund managers: Atul Patel (for US portion) and Chaitanya Pande (for India portion).
Exit load: The Fund will have an exit load of 3% of the NAV (net asset value) if units are redeemed within three months from the date of allotment. For redemption of units after three months but before one year from the date of allotment, the Fund will charge an exit load of 1% of NAV. There is no charge for redemption of units after one year.
ICICI Prudential AMC is a joint venture between ICICI Bank and UK-based Prudential Plc. The Company manages a comprehensive range of schemes to meet the varying investment needs of its investors.