In November 2020, the Securities Exchange Board Of India (SEBI) introduced a new mutual fund category called “Flexicap Funds”. These funds are actively managed by fund manager who dynamically allocate assets across market capitalization. To maintain stability and liquidity in the portfolio the fund invests in large cap stocks along with meaningful exposure to mid-cap and small-cap segment to boost returns.

Investors who want to diversify their portfolio across market capitalization can consider investing in flexicap funds. The fund manager has the flexibility to assess the allocation and adjust investments across sectors/stocks/market cap based on its outlook from time to time.

ICICI Prudential Mutual Fund has launched ICICI Prudential Flexicap Fund; it is an open-ended dynamic equity scheme investing across large cap, mid cap & small cap stocks.

On the launch of this fund, Mr Nimesh Shah MD and CEO at ICICI Prudential AMC said, “Flexi cap is one category (as per SEBI Scheme categorisation) among the equity schemes which is the most flexible among the equity scheme offerings. The ICICI Prudential Flexicap Fund has the flexibility to invest across large, mid and small cap space without any restriction. We will be guided by our in-house market cap allocation model to provide direction and help ascertain the right allocation to various market caps.”

“Further, based on macroeconomic factors and business cycle, the fund manager may fine tune the allocation suggested by the model which will be in line with the SID at all times. This complete combination of flexibility with control, we believe, will help investors to comfortably navigate across market conditions, and aid investors in reaching their financial goals effectively.” He added.

Table 1: Details of ICICI Prudential Flexicap Fund

Type	An open-ended dynamic equity scheme investing across large cap, mid cap & small cap stocks.	Category	Flexicap Fund
Investment Objective	To generate long-term capital appreciation by investing predominately in equity & equity related instruments across market capitalization. However, there can be no assurance or guarantee that the investment objective of the Scheme would be achieved.
Min. Investment	Rs 5000/- and in multiples of Re 1 thereafter. Additional Purchase Rs 1000/- and in multiples of Re 1 thereafter.	Face Value	Rs 10/- per unit
SIP/SWP/STP	Available
Plans	Direct Regular	Options	Growth Income Distribution Cum Capital Withdrawal (IDCW)
Entry Load	Not Applicable	Exit Load	1% of applicable Net Asset Value – If the amount sought to be redeemed or switch out within 12 months from allotment. Nil – If the amount sought to be redeemed or switched out more than 12 months.
Fund Manager	Mr Rajat Chandak Ms Priyanka Khandelwal	Benchmark Index	S&P BSE 500 TRI
Issue Opens:	June 28, 2021	Issue Closes:	July 12, 2021

(Source: Scheme Information Document) 

What will the Investment strategy for ICICI Prudential Flexicap Fund be?

ICICI Prudential Flexicap Fund will predominantly invest in equity & equity related securities across market capitalisation to generate long-term capital appreciation.

The scheme aims to invest across the market opportunities through its in-house marketcap model. The investments can be spread across large cap, mid-cap and small-cap stocks. The investment strategy for this fund follows a mix of the top-down approach for identification of large cap stocks and the bottom-up approach for mid and small cap stocks.

Stock specific risk will be minimized by investing only in those companies that have been thoroughly analysed by the Investment team at the fund house.

The following are the broad parameters/factors that will be considered while building the portfolio of companies:

• Business and economic fundamentals driven by in-depth research techniques

• Employing strong stock selection

• Liquidity/risk considerations

• Long term growth prospects

• Valuation parameters

The fund manager has the flexibility to actively manage the allocation dynamically across large cap, mid-cap and small cap stocks depending on the market conditions and opportunities. The portfolio will be assessed and re-balanced as per the in-house marketcap model.

Apart from investing 65% to of its assets in equity & equity related instruments of large-cap, mid-cap and small-cap companies. It may also invest upto 35% in other equity related instruments, up to 35% in debt instruments, units of debt mutual fund schemes and money market instruments. In addition, it may also invest up to 10% in preference shares and up to 10% in units issued by REITs and INVITs.

Under normal circumstances, asset allocation will be as under:

Table 2: Asset Allocation of ICICI Prudential Flexicap Fund

Instruments	Indicative Allocation (% of net assets)		Risk Profile
	Minimum	Maximum	High/Medium/Low
Equity & Equity related instruments of large-cap, mid-cap and small-cap companies	65	100	Medium to High
Other Equity & Equity related instruments	0	35	Medium to High
Debt instruments, Units of Debt Mutual Fund schemes and Money market instruments @	0	35	Low to Medium
Preference shares	0	10	Medium to High
Units issued by REITs and INVITs	0	10	Medium to High

@Excluding subscription money in transit before deployment / pay out

(Source: Scheme Information Document) 

Who will manage ICICI Prudential Flexicap Fund?

Mr Rajat Chandak will be the dedicated fund manager for this scheme while Ms Priyanka Khandelwal will be the fund manager for overseas investment of the scheme.

Mr Rajat Chandak is Fund Manager at ICICI Prudential Asset Management Company Ltd. and he has over 11 years of experience in fund management/ research analysis. He is associated with ICICI Prudential Asset Management Company Limited from May 2008 as investment analyst and fund manager.

Mr Chandak’s qualification includes B.com and PGDM (Finance). The other schemes he currently manages are ICICI Prudential Bluechip Fund, ICICI Prudential Bharat Consumption Fund – Series 4, ICICI Prudential Long Term Wealth Enhancement Fund, ICICI Prudential Regular Savings Fund, ICICI Prudential Capital Protection Oriented Fund – Series XIV – Plan A 1275 Days, ICICI Prudential Bharat Consumption Fund, ICICI Prudential Multicap Fund, ICICI Prudential Balanced Advantage Fund.

Ms Priyanka Khandelwal is Overseas Fund Manager at ICICI Prudential Asset Management Company Ltd. and she has over 5 years of experience in financial services. She joined ICICI AMC in October 2014 in Strategic Planning and Analysis and later as Equity Research Analyst.

Ms Priyanka is a Chartered Accountant, Company Secretary and B.com graduate. The other schemes currently managed by her are ICICI Prudential US Bluechip Equity Fund and ICICI Prudential Global Stable Equity Fund (FOF).

Fund Outlook – ICICI Prudential Flexicap Fund

ICICI Prudential Flexicap Fund offers investors diversification by investing in a mix of large cap, mid-cap and small-cap stocks.

This scheme will invest across market capitalization and leverage emerging opportunities. It will dynamically shift between the market cap segments based on prevailing market conditions and stock specific opportunities.

Investments in large cap stocks tend to limit downside risk during market volatility and maintain liquidity of the portfolio. Whereas, investments in mid-cap and small cap stocks may be positioned to capture potential growth during economic recovery phase.

However, do note that there is no specific limit to allocation in any segment. If the fund manager increases exposure in mid-cap and small cap, the portfolio can be prone to higher volatility. This may increase the risk in the portfolio for investors. The performance of the scheme depends on how the fund manager constructs the portfolio that provides a mix of stability and growth.

This scheme is suitable for investors seeking to benefit from opportunities across market capitalization. But ensure you have a high-risk appetite and long-term investment horizon to survive the bouts of volatility and your investment objective is aligned with the fund.

This article first appeared on PersonalFN here