ICICI Prudential MF launches US Bluechip Equity Fund, the first local actively managed fund investing in US equity

The fund seeks to offer geographic diversification to domestic investors by investing in US which has a low correlation with the Indian market.

ICICI Prudential US Bluechip Equity Fund is a diversified equity fund that seeks to provide long-term capital appreciation by primarily investing in companies listed on the New York Stock Exchange and NASDAQ. The NFO opened on 18^th June and will close on 2^nd July.

The fund has a target investment list of 20 to 25 stocks. It will have in place sectoral and stock specific limits. The US Bluechip Fund will target companies with a market cap in excess of $4 billion. The benchmark for the fund will be the S&P 500.

The fund will invest a minimum of 65% in equity and equity related securitiesof blue-chip companies listed on the NYSE and NASDAQ and a maximum of 35% of its assets in fixed income securities in India and the US including money market instruments, cash and equivalent, treasury bills and fixed deposits. The scheme will not invest in derivatives or securitized debt. It may invest in ADRs and GDRs issued by Indian and foreign companies.

The fund house has appointed Morning Star as research partner and has entered into a three-year arrangement. Morning Star will provide research analysis for the US market.

According to the AMC, the fund seeks to give Indian investors the opportunity to invest in foreign stocks which would have otherwise been difficult for an investor.  All purchases and redemptions for investors will in rupees. Since it won’t invest in Indian equity, the fund will be taxed like a fixed income scheme.

Speaking on the fund in a press meet, Nimesh Shah, MD & CEO, ICICI Prudential AMC said, “The launch of the fund will illustrate our focus on making available all meaningful investment products to Indian investors.”

Sankaran Naren CIO – Equity said that with the current valuations of US equities being attractive, the fund has a more compelling appeal to investors. He added that the S&P 500 was more appropriate for this fund as the NASDAQ is technology focused and the Dow is not a weighted market cap index.

Himanshu Pandya, VP & Head – Products and Communication said, “The fund will have meaningful diversification as there is low correlation between Indian equity and US equity markets.”

The dedicated fund manager for US investments will be Atul Patel with Chaitanya Pande managing the investments in Indian fixed income securities.