Investing consists of selecting the right asset mix, timing the market to identify various market opportunities, and access to information about various asset classes & schemes available in the market. An investor is bound by limited exposure to knowledge and unlimited exposure to market sentiments.
Many investors struggle to select the right asset allocation to their portfolio, and due to a lack of knowledge, they are unable to allocate the suitable asset mix for them. Instead, you tend to stick to the performing asset class as long as markets are favourable. Allocating the right asset allocation mix to your portfolio can assist you in gaining optimal risk-adjusted returns.
Considering the current market scenario, where equities might get volatile, interest rates may rise, thus making fixed-income investments challenging; a multi-asset approach could be a good option. ICICI Prudential Mutual Fund has launched a fund that follows a multi-asset approach with passive investing into international equities.
ICICI Prudential Multi-Asset Fund of Fund is an open-ended fund of funds scheme investing in equity, debt, gold, and global index funds/exchange-traded funds. On the launch of this fund, Mr Chintan Haria, Head – Product Development & Strategy, ICICI Prudential Mutual Fund, said, “We believe this product is a simple solution for an investor looking for multi-asset allocation through the passive route. Apart from allocation to domestic equities ETFs/Index, debt ETFs/Index, and gold ETFs, an investor will also have exposure to ETFs/Index investing in global companies as well through this product, thus bringing in geographical diversification as well.”
Table 1: Details of ICICI Prudential Passive Multi-Asset Fund of Funds
|An open-ended fund of funds scheme investing in equity, debt, gold, and global index funds/exchange-traded funds.
|Fund of Fund
|ICICI Prudential Passive Multi-Asset Fund of Funds is a Fund of Funds scheme with the primary objective to generate returns by predominantly investing in passively managed funds launched in India and/or overseas. 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. Additional Purchase Rs 1000/- and in multiples of Re 1/- thereafter.
|Rs 10/- per unit
|CRISIL Hybrid 50+50- Moderate Index (80% weightage) + S&P Global 1200 Index (15% weightage) + Domestic Gold Price (5% weightage).
|December 27, 2021
|January 10, 2021
(Source: Scheme Information Document)
The investment strategy for ICICI Pru Passive Multi-Asset FoF will be as follows:
ICICI Prudential Passive Multi-Asset Fund of Funds is a Fund of Funds scheme with the primary objective to generate returns by predominately investing in passively managed funds launched in India and/or overseas.
The indicative universe where the scheme shall invest is as follows:
- Units of mutual fund schemes: The scheme shall invest in Equity ETFs/Index Funds, Debt ETFs/Index Funds, Gold ETFs launched by ICICI Prudential AMC and/or any other AMCs from time to time, and ETFs/Index Funds investing in Overseas securities.
- The scheme may also invest in reverse repo tri-party repo, units of debt-oriented mutual fund schemes.
At all points of time, the scheme will remain invested at least 95% (minimum allocation) in the underlying schemes. With respect to investing in Units of mutual fund schemes launched in India, the scheme can consider investing in any of the schemes mentioned in the asset allocation or any other such schemes as may be launched from time to time (managed by ICICI Prudential Mutual Fund or any other Mutual Fund(s)) having similar objectives, strategy, asset allocation, and other attributes, etc.
The scheme follows a (VTT) approach: Valuations to ascertain whether an asset class is expensive or cheap based on various indicators, Triggers are events that can chart the course of direction (positive/negative) and Technicals helps to select ETFs/Index funds based on their relative performance.
The scheme shall broadly evaluate the following parameters to have an optimum allocation across asset classes:
- Macro indicators (GDP, Interest Rate movement, Currency Movement, etc.)
- Yield Curve
- Global Demand and Supply
Under normal circumstances, the asset allocation will be as under:
Table 2: Asset Allocation for ICICI Prudential Passive Multi-Asset Fund of Funds
|Indicative Allocation (% of net assets)
|Units of mutual fund schemes as stated below:
|Domestic Equity ETFs/Index Funds
|Domestic Debt ETFs/Index Funds
|Low to Medium
|ETFs/Index Funds investing in Overseas securities
|Medium to High
|Domestic Gold ETFs
|Medium to High
|Reverse Repo, Tri-Party Repo*@, Units of Debt oriented mutual fund schemes
|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/payout
(Source: Scheme Information Document)
The scheme aims to invest in domestic equities to generate capital appreciation through India’s growth story, in overseas securities to provide diversification benefits and help to invest in megatrends. It will invest in debt schemes to generate stable returns and long-term wealth creation opportunities through underlying debt ETFs/ Index Funds. A small portion of the scheme may be invested in Gold ETFs, which can act as a potential hedge against inflation.
Who will manage ICICI Prudential Passive Multi-Asset Fund of Funds?
Mr Sankaran Naren, Mr Manish Banthia, Mr Ritesh Lunawat, Mr Dharmesh Kakkad, Mr Nishit Patel, and Ms Priyanka Khandewal for overseas investments will be the fund managers for this scheme.
Mr Sankaran Naren will be managing the equity portion of the portfolio. He has over 30 years of experience in Fund Management, Equity Research, Operations. etc., and holds a B.Tech degree from IIT Chennai and PGDM from IIM Kolkata. Prior to joining ICICI Pru AMC, he has worked with Refco Sify Securities India Pvt. Ltd. as Head of Research, HDFC Securities Ltd. as Vice President and Director and COO, Yoha Securities as the CEO.
At ICICI Pru AMC, Mr Naren currently manages ICICI Prudential Large & Mid Cap Fund, ICICI Prudential Smallcap Fund, ICICI Prudential Technology Fund, ICICI Prudential Exports and Services Fund, ICICI Prudential Bharat Consumption Fund – (Series 4), ICICI Prudential Long Term Wealth Enhancement Fund, ICICI Prudential Equity & Debt Fund, ICICI Prudential Multi-Asset Fund, ICICI Prudential Asset Allocator Fund (FOF), ICICI Prudential Passive Strategy Fund (FOF), ICICI Prudential Thematic Advantage Fund (FOF), ICICI Prudential India Opportunities Fund, ICICI Prudential Commodities Fund, ICICI Global Advantage Fund (FOF), ICICI Prudential Value Discovery Fund
Mr Manish Banthia has an overall work experience of around 16 years, and he is a CA, MBA, and B.com graduate. He has worked with ICICI PRU AMC under the fixed income investments from August 2007 to October 2009. Before that, he was associated with Aditya Birla Nuvo Ltd. and Aditya Birla Management Corporation Ltd.
At ICICI Pru AMC, Mr Banthia currently manages ICICI Prudential Regular Savings Fund, ICICI Prudential Equity Savings Fund, ICICI Prudential Equity & Debt Fund, ICICI Prudential Child Care Fund (Gift Plan), ICICI Prudential Ultra Short Term Fund, ICICI Prudential Short Term Fund, ICICI Prudential Medium Term Bond Fund, ICICI Prudential Bond Fund, ICICI Prudential Long Term Bond Fund, ICICI Prudential Balanced Advantage Fund, ICICI Prudential Credit Risk Fund, ICICI Prudential Gold ETF, ICICI Prudential All Seasons Bond Fund, ICICI Prudential Debt Management Fund (FOF), ICICI Prudential Asset Allocator Fund (FOF), ICICI Prudential Thematic Advantage Fund (FOF), ICICI Prudential Retirement Fund (all plans), ICICI Prudential Income Optimizer Fund (FOF), ICICI Prudential Business Cycle Fund, ICICI Prudential Regular Gold Savings Fund (FOF)
Mr Ritesh Kumar Lunawat is a CA and B.Com graduate. He has been associated with ICICI Prudential Asset Management Company Limited since September 27, 2013. At ICICI Pru AMC, Mr Lunawat currently manages ICICI Prudential Income Optimizer Fund (FOF), ICICI Prudential Debt Management Fund (FOF), ICICI Prudential Child Care Fund (Gift Plan), ICICI Prudential Equity Savings Fund, ICICI Prudential Ultra Short Term Fund
Mr Dharmesh Kakkad is a CA, CFA USA, and B.com graduate. He was associated with ICICI Prudential Asset Management Company Limited from June 2010. Prior to working in the Dealing function, he worked in the Operations Department of ICICI Prudential AMC. At ICICI Pru AMC, Mr Kakkad currently manages ICICI Prudential Asset Allocator Fund (FOF), ICICI Prudential Income Optimizer Fund (FOF), ICICI Prudential Passive Strategy Fund (FOF), ICICI Prudential Thematic Advantage Fund (FOF), ICICI Prudential Global Advantage Fund (FOF), ICICI Prudential India Equity FOF, ICICI Prudential Equity Savings Fund, ICICI Prudential Pharma Healthcare and Diagnostics (P.H.D) Fund
Mr Nishit Patel joined ICICI Prudential Asset Management Company Limited in November 2018 and was working under ETF Business. He is a Chartered Accountant and B.Com graduate. At ICICI Pru AMC, Mr Patel currently manages 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 Nifty Low Vol 30 ETF, 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, ICICI Prudential IT ETF BHARAT 22 ETF, ICICI Prudential Nifty Low Vol 30 ETF FOF, ICICI Prudential Healthcare ETF, ICICI Prudential FMCG ETF, ICICI Prudential Regular Gold Savings Fund (FOF), ICICI Prudential Consumption ETF, ICICI Prudential Smallcap Index Fund.
Ms Priyanka Khandelwal will be managing the overseas investment in the portfolio. She is a Chartered Accountant, Company Secretary, and B.Com graduate. She has been working with ICICI Prudential Asset Management Company Limited as Deputy Manager Finance from October 2014 to January 2016.
Fund Outlook – ICICI Pru Passive Multi-Asset FoF
ICICI Pru Passive Multi-Asset Fund of Fund scheme is a simple solution for tactical allocation to equity debt, and gold – the three asset classes. However, the fortune of the fund will be closely linked to how investments in these three asset classes perform with the investment strategy of the scheme.
The potential risk-adjusted returns generated will be subject to risks and opportunities in the respective asset classes depending on a variety of factors and subject to market risk.
The scheme will invest a major portion in equities (domestic and global) and may be prone to geopolitical risk and currency risk. The debt portion will attract interest rate risk, credit risk, default risk.
Although it is an FoF scheme, it will be passively managed, as the scheme has the mandate to invest in ETFs and Index Funds while following the asset allocation. Thus, the fortune of this scheme will depend upon the performance of the underlying schemes it will plan to invest in. That said, amidst uncertainty brought by the recent resurgence of the ‘Omicron,’ a new variant (of the coronavirus), following a multi-asset approach make sense. This is because the margin of safety appears to have narrowed to go gung-ho with equities, while the returns generated by debt funds have slowed with 10-year G-sec yields being well-anchored around 6%. Gold too has paled on returns of late.
The scheme is suitable for investors who can stomach the high risk and are seeking to invest in a well-diversified blend of asset classes under a single scheme. That said, it is necessary to have a long investment horizon (of 3 to 5 years) and align your investment objectives with the fund.
This article first appeared on PersonalFN here