investing in mutual funds
ICICI Prudential Mutual Fund has announced the launch of ICICI Prudential Balanced Hybrid Fund. It is an open-ended balanced scheme that invests only in equity and debt instruments. Arbitrage will not be allowed in this scheme. The New Fund Offer (NFO) opened on June 30 and will close on July 14.
The objective of this scheme is to provide capital appreciation and income by investing in equity and debt instruments through an active strategy. In case of equity, the fund will invest across market capitalization and sectors, while in case of debt, it will look for opportunities based on duration, AAA/government securities and credit. The portfolio will be assessed from time to time based on valuations and market conditions and the allocation between equity and debt will be decided based on earnings and bond yields.
This is how a big fund will be prepared
Commenting on the launch, Shankaran Naren, Executive Director and Chief Investment Officer, ICICI Prudential Asset Management Company, said: ICICI Prudential Balanced Hybrid Fund has been designed to strike the right balance between equity and debt allocation, with 40-60% of the portfolio allocated to each of the two, depending on the current market conditions. We believe that this balanced approach will work better in the current environment as well as help generate income for investors and build wealth in the long run. Equity has created wealth in the long run, although declines and ups and downs are natural in this asset class. In contrast, debt (debt-based investments) gives more stable returns over time and provides more stability than equities. Since these two asset classes generally do not move in the same direction together, mixing them in a single portfolio can improve the investing experience. Historically a mixed portfolio of equity and debt has shown lower losses during equity downturns, while giving better returns than only debt in normal market conditions
You can invest with only Rs 500
A minimum investment of Rs 500 can be made in this scheme. After that you can invest in multiples of Re 1. ICICI Prudential Balanced Hybrid Fund has two options, Direct and Regular Plan. Its benchmark is CRISIL Hybrid 50+50 – Moderate Index. Its fund managers are Roshan Chutki, Manish Banthia and Akhil Kakkar. Under the structure of this scheme, both equity and debt get an allocation of 40-60% and there is no allocation for arbitrage. This is what makes the ‘Balanced Hybrid’ category prescribed by SEBI different from the ‘Aggressive Hybrid’ category (65-80% equity, 20-35% debt) and the ‘Conservative Hybrid’ category (10-25% equity, 75-90% debt).
Special portfolio of shares will be included
Equity allocation: A specific portfolio of stocks created by combining top-down and bottom-up approaches. On one hand, importance is given to macro backdrop, sector and sub-sector cycles, GDP, inflation, interest rates and currency fluctuations, while on the other hand, attention is given to company-specific research, profit earning capacity, cash flow generation, ‘MOT’ (competitive edge) and demand. Debt Allocation: Securities are selected from across the credit and duration spectrum based on the fund’s view on interest rates, credit spreads and the overall economy. It combines accrual strategies and tactical duration management to generate consistent income.
