India’s consumption sector at the initial stage of pandemic struggled with down trading. However, with rise in demand in consumption, accelerated vaccination process and several states being functional with limited lockdown restrictions, has given a positive outlook to the sector. As the economy is reviving, consumers tend to spend on quality products, instead of cutting down on direct consumption items.
The severe second wave merely created a pause in India’s consumption story. Consumers are now attracted to purchase quality products. There has been an increase in the sales of premium products and high quality goods, consumers are now relying on known brands that are the leading companies under the consumption sector.
Investment in consumption sector offers investing in high quality companies, that are the market leaders of that industry and benefits investors to generate optimal returns. There are multiple sub-sectors involved under the consumption sector and the benchmark Nifty India Consumption Index measures the performance of these companies under the consumption sector.
ICICI Prudential Mutual Fund has launched ICICI Prudential Consumption ETF, it is an open-ended Index Exchange Traded Fund tracking Nifty India Consumption Index. The scheme aims to track the underlying index that consists of 30 market leader companies under the consumption sector, to achieve scheme’s investment objective.
Table 1: Details of ICICI Prudential Consumption ETF
|An open-ended Index Exchange Traded Fund tracking Nifty India Consumption Index.
|Exchange Traded Fund
|The investment objective of the scheme is to provide returns before expenses that closely correspond to the total return of the underlying index subject to tracking errors. However, there can be no assurance or guarantee that the investment objective of the Scheme would be achieved.
|Rs 1,000 and in multiples of Re 1 thereafter.
|Rs 10/- per unit
|Mr. Kayzad Eghlim
Mr. Nishit Patel
|Nifty India Consumption TRI.
|October 18, 2021
|October 25, 2021
(Source: Scheme Information Document)
The investment strategy for ICICI Prudential Consumption ETF is as follows:
ICICI Prudential Consumption ETF will predominantly invest in stocks constituting the underlying index in the same proportion as in the Index and endeavour to track the benchmark index.
The scheme will follow a passive investment strategy to achieve its investment objective by investing in a basket of stocks under Nifty India Consumption Index that offers exposure to the consumption theme. The fund intends to maintain a low tracking error by closely aligning the portfolio in line with the index.
The endeavour is to invest in leading companies across sectors under the consumption theme and track the performance of the underlying index. A very small portion (0-5% of the net assets) of the fund may be kept liquid to meet the liquidity and expense requirements. The portfolio shall be rebalanced within 7 days to ensure adherence to the asset allocation norms of the scheme.
About the benchmark
The NIFTY India Consumption Index is designed to reflect the behavior and performance of a diversified portfolio of companies representing the domestic consumption sector, which includes sectors like Consumer Non-durables, Healthcare, Auto, Telecom Services, Pharmaceuticals, Hotels, Media & Entertainment, etc. The NIFTY India Consumption Index comprises of 30 companies listed on the National Stock Exchange (NSE).
The following is the list of constituents under the index by their weightage as of now:
Under normal circumstances, the asset allocation will be as under:
Table 2: Asset Allocation for ICICI Prudential Consumption ETF
|Indicative Allocation (% of net assets)
|Equity and Equity related securities of companies constituting the underlying index (Nifty India Consumption Index)
|Medium to High
|Money market instruments including TREPs*, Units of debt schemes#
|Low to Medium
|Units of Debt ETFs
|Low to Medium
*Or similar instruments as may be permitted by SEBI/RBI from time to time, subject to requisite approvals from SEBI/RBI, as applicable.
#Excluding subscription money in transit before deployment/pay-out.
(Source: Scheme Information Document)
Who will manage ICICI Prudential Consumption ETF?
Mr Kayzad Eghlim and Mr Nishit Patel will be the dedicated fund managers for this scheme.
Mr Kayzad Eghlim is the Vice President and Fund Manager at ICICI Prudential Asset Management Company Ltd. He has more than 30 years of experience and his qualification includes, MBA, M.Com, and B.Com. Prior to this, he was associated with IDFC Investment Advisors Ltd. As Dealer Equities, Prime Securities as a Manager, Canbank Mutual Fund (IS Himalayan Fund) as a Fund Manager, Canbank Mutual Fund as an Equity Dealer, Assisting the Fund Manager and worked with the Primary Market Department (IPO) at the beginning of his career.
The other schemes managed by Mr Kayzad are ICICI Prudential Equity – Arbitrage Fund, ICICI Prudential Nifty 100 ETF, ICICI Prudential Nifty Next 50 Index Fund, ICICI Prudential Nifty ETF, ICICI Prudential NV20 ETF, ICICI Prudential Sensex ETF, ICICI Prudential Nifty Index Fund, ICICI Prudential Equity Savings Fund, ICICI Prudential Nifty Low Vol 30 ETF, BHARAT 22 ETF, ICICI Prudential S&P BSE 500 ETF, ICICI Prudential Nifty Next 50 ETF, ICICI Prudential Bharat 22 FOF, ICICI Prudential Bank ETF, ICICI Prudential Midcap Select ETF, ICICI Prudential Midcap 150 ETF, ICICI Prudential Alpha Low Vol 30 ETF, ICICI Prudential IT ETF,ICICI Prudential Nifty Low Vol 30 ETF, ICICI Prudential Healthcare ETF. and ICICI Prudential FMCG ETF
Mr Nishit Patel is a Fund Manager – Passive Funds at ICICI Prudential Asset Management Company Ltd. He is a Chartered Accountant and B.com graduate. Prior to this, he was associated with ETF Business at ICICI Prudential AMC.
The other schemes managed by Mr Nishit Patel are, ICICI Prudential Midcap Select ETF, ICICI Prudential Nifty 100 ETF, ICICI Prudential Nifty Next 50 Index Fund, ICICI Prudential Nifty ETF, ICICI Prudential NV20 ETF, ICICI Prudential Sensex Index Fund, ICICI Prudential Nifty Index Fund, ICICI Prudential Regular Gold Savings Fund (FOF), ICICI Prudential Gold ETF, ICICI Prudential Sensex ETF, ICICI Prudential S&P BSE 500 ETF, ICICI Prudential BHARAT 22 FOF, ICICI Prudential Nifty Next 50 ETF, ICICI Prudential Bank ETF, ICICI Prudential Private Banks ETF, ICICI Prudential Midcap 150 ETF, ICICI Prudential Alpha Low Vol 30 ETF, BHARAT 22 ETF, ICICI Prudential IT ETF, ICICI Prudential Nifty Low Vol 30 ETF, ICICI Prudential FMCG ETF and ICICI Prudential Healthcare ETF.
Fund Outlook – ICICI Prudential Consumption ETF
ICICI Consumption ETF aims to invest in a basket of 30 consumption-oriented companies from sectors such as, consumer non-durables, media & entertainment, etc.
The scheme is a low-cost passive investment solution that offers investors a bite-size access to the biggest consumption names in India, by passively investing in stocks comprising the Nifty India Consumption Index.
Being a sectoral ETF, this scheme limits the fund manager’s interference and eliminates the risk of stock selection. The scheme endeavours to benefit from the Indian consumption sector, as Indian economy is at fast pace of revival and thus, it provides a huge opportunity to generate optimal returns through growth of consumption sector.
However, the scheme will focus and invest in companies under the consumption sector, which makes it prone to concentration risk. In addition, if the sector goes out of favour, your investments may turn sour due to the concentrated nature of the portfolio.
This scheme ICICI Consumption ETF is suitable only for investors, having a high-risk appetite and a long investment horizon. Ensure that your investment objectives are aligned with the fund.
This article first appeared on PersonalFN here