ICICI Prudential Mutual Fund has launched its latest investment opportunity, the ICICI Prudential Nifty LargeMidcap 250 Index Fund. This new fund offer (NFO) is set to provide investors with exposure to both large and mid-cap segments of the market, aiming for a balanced and diversified portfolio.
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The New Fund Offer (NFO) period for the ICICI Prudential Nifty LargeMidcap 250 Index Fund opens on February 22, 2024, and will conclude on March 7, 2024.
The fund is designed to invest in the constituents of the Nifty LargeMidcap 250 Index, which represents companies from both the Nifty 100 and Nifty Midcap 150 universe.
The index undergoes a semi-annual rebalance, maintaining a 50% weightage for both large-cap and mid-cap stocks. Any necessary resets occur on a quarterly basis, ICICI Prudential Mutual Fund said.
There is no entry load with the fund.
Additionally, the exit load is set at nil, with the trustees reserving the right to prescribe or modify the exit load structure with prospective effect, subject to regulatory limits.
The minimum application amount for the fund is ₹100.
The fund will be managed by Nishit Patel, Priya Sridhar, and Kewal Shah.
Asset allocation and risk profile
The ICICI Prudential Nifty LargeMidcap 250 Index Fund's asset allocation includes a maximum of 100% in equity and equity-related securities, constituting the underlying index, and a minimum of 95%.
The risk profile for equity and equity-related securities is categorised as "Very High."
Additionally, up to 5% of the total assets may be allocated to money market instruments, including TREPs, and units of debt schemes, with a risk profile ranging from Low to Medium.
Historical performance
In terms of performance, the Nifty LargeMidcap 250 Total Return Index (TRI) has demonstrated decent returns with lower risk compared to the NIFTY 100 TRI and Nifty MidCap 150 TRI, as per the fund house.
Over the last decade, the index has generated a Compound Annual Growth Rate (CAGR) of 23.22%.
Furthermore, in calendar year returns, the Nifty LargeMidcap 250 index has outperformed the Nifty 100 index seven times in the last ten years.
Investment rationale
The fund house shares these reasons for investing in the fund:
Market cap exposure: Provides exposure to both large and midcap segments of the market.
Economic growth: Historically, the LargeMidcap index has outperformed large-cap indices during economic booms.
Balanced diversification: Offers better and more balanced diversification compared to large-cap and midcap indices individually.
Low capital requirement: With a minimum investment of ₹100, investors gain exposure to all 250 large and midcap stocks.
Size migration: Aims to participate in the growth story of midcap stocks with the potential to become large caps.
Favourable risk and return ratio: Historically, the LargeMidcap Index has shown a favourable risk and return ratio compared to the Midcap Index.
Systematic features: Allows investors to benefit from Systematic Investment Plans (SIP), Systematic Transfer Plans (STP), etc.
Non-demat holders: Enables non-demat account holders to seek exposure to the large and midcap segments of the market.
Chintan Haria, Principal - Investment Strategy, ICICI Prudential AMC said, "The Nifty LargeMidcap 250 Index Fund provides an excellent opportunity to leverage the stability provided by large caps and the growth potential offered by midcaps at a low cost."
He suggested investors consider this offering as part of their equity allocation and utilise systematic investment routes to achieve long-term financial goals.
Investors should, however, carefully evaluate the features and potential benefits of the ICICI Prudential Nifty LargeMidcap 250 Index Fund before investing.
(Edited by : Amrita)
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