ICICI Prudential Mutual Fund has sought SEBI approval to launch ICICI Prudential Bharat 22 FOF, a fund of funds offer that will invest in Bharat 22 ETF.
The fund house had launched Bharat 22 ETF, as part of the government’s Rs.72,500-crore disinvestment programme. Bharat 22 consists of companies like National Aluminium, ONGC, Coal India, IOC, BPCL, SBI, Axis, Bank of Baroda, Rural Electrification Corporation, Power Finance Corporation, Indian Bank, ITC, Bharat Electronics, Engineers India, NBCC, Power Grid, NTPC, Gail India, NHPC, NLC India and SJVN.
A "fund of funds" is an investment strategy of holding units of other investment funds rather than investing directly in stocks or bonds.
Sharing the rationale for this launch, Raghav Iyengar, Head - Retail & Institutional Business, ICICI Prudential Mutual Fund said, “In India there are approximately 2 crore demat holders and a demat account is required for investing in an ETF. For non-demat account holders, a fund of fund structure will offer an opportunity to participate in ICICI Prudential managed Bharat 22 ETF.”
He further adds that another advantage of a FoF is that investors can buy or sell the units of FoF with the AMC while they will have to go to exchanges to execute such transactions in the ETF route. This means your clients do not have look for a buyer to redeem ETF units.
Iyengar believes that this fund provides a good starting point for investors. “More than 85% of the portfolio of BHARAT 22 ETF is large-cap companies which have strong and long-standing leadership in their respective sectors. So, we believe this is a good way to start investing, especially for those looking to participate in India’s growth story over the long run,” said Iyengar.
The scheme will invest at least 95% in units of Bharat 22 ETF and the rest in units of liquid schemes and money market instruments. The scheme will be benchmarked against S&P BSE Bharat 22 Index. Kayzad Eghlim will be the fund manager of the scheme.
