The mutual fund market in India is one of the most active regarding the volume and investors who invest directly or through SIPs. These investment vehicles pool money from multiple investors to invest in a diversified portfolio of securities, like stocks, bonds, money market instruments, and other assets.
Various mutual fund houses in India design new schemes that align with Sensex’s and NIFTY’s current share market scenario to offer effective diversification and better returns.
One of the biggest Asset Management Companies, ICICI Prudential Mutual Fund, has launched a New Fund Offer (NFO), ICICI Prudential Innovation Fund for investors to benefit from global innovation strategies and themes.
What Are Innovation Funds?
Innovation mutual funds, or technology or disruptive innovation funds, are primarily invested in companies at the front of innovation and technological advancements. The companies mainly belong to technology, biotechnology, healthcare, renewable energy, artificial intelligence, robotics, cloud computing, e-commerce, and other emerging industries.
ICICI Prudential Innovation Fund NFO
ICICI Prudential Innovation Fund NFO is a mutual fund scheme launched byICICI Prudential Mutual Funds as an open-ended thematic equity scheme. It aims to predominantly invest in equity, related securities and global mutual fund/ Exchange Traded Funds (ETF) units with innovation-based business operations.
The fund will remain open for subscription for investors from 10th to 24th April 2023. It is unique in its investment strategy as it does not invest the pooled money to mirror a specific index such as Sensex or NIFTY, allowing investors to invest in ICICI mutual funds unitswith immense future growth potential.
Like other mutual funds that trade on stock market exchanges such as NSE and BSE, the ICICI Prudential Innovation Fund will also be traded on these exchanges. Investors can put in at least Rs 5,000 or invest through a minimum SIP of Rs 500 for 12 months. The exit load of the mutual funds India scheme is 1% for redemption within 360 days, and the maximum Total Expense Ratio (TER) is 2%.
Investment Rationale
Mutual fund houses create innovation funds to track the performance of stocks that mainly focus on building innovative products. The ICICI Prudential Innovation Funds aims to invest in stocks and related securities of companies that are;
- At the initial stage of research or product/services/solutions development.
- At the pre-testing stage, launch or experimental stage of product/services/solutions.
- At the stage of launch/post-launch stage of the products/process/services/solutions.
Investment Strategy
ICICI Prudential Innovation Fund aims to invest 80% of the pooled money in companies adopting innovation strategies and themes. The remaining will be invested in GDR, ADR, Mutual Funds, ETFs, or Foreign Securities. One can invest in equities and related securities of overseas companies with the same strategies and themes.
The fund will analyse companies based on their growth potential and make investments that can provide good returns in the next 3-4 years. The mutual fund portfolio will contain 40-45 stocks and follow a bottoms-up approach to bring exposure to companies involved in innovating through their products/processes/services/solutions.
While the fund has not announced any cash strategy, there will be a 2-5% limit for small and mid-cap stocks and 7-10% for large and mega-cap stocks.
Allocation Pattern
Here is the allocation pattern of the ICICI Prudential Innovation Fund.
| Types of Instruments | Minimum Percentage | Maximum Percentage | Risk Profile |
| Equity & related securities of companies adopting innovation strategies and themes & overseas equities adopting innovation strategies and themes. | 80% | 100% | Very High |
| Other Equity & related instruments. | 0% | 20% | Very High |
| Debt and Money Market Securities. | 0% | 20% | Low To Medium |
| Units issued by REITs and InvITs. | 0% | 10% | Very High |
How to Invest in ICICI Prudential Innovation Fund
Below are the steps to invest in ICICI Prudential Innovation Fund.
- Login to your demat account. If you do not have an account, register with a stockbroker to open a demat account.
- After logging in to your account, search for ICICI Prudential Innovation Fund.
- Select the investment type – SIP or lump-sum for the mutual fund.
- Proceed with payment. After payment completion, you will receive a confirmation text and an email from the stockbroker confirming that you have successfully invested in ICICI Prudential Innovation Fund.
Conclusion
ICICI Prudential Innovation Fund is a thematic fund that allows investors looking to benefit from new-age innovations to invest and make good returns over time. You can open a demat account and invest in the fund easily as it trades on the stock market exchanges. Like other investment instruments, the fund also contains several risks, making it essential for individuals to read the NFO prospectus in detail before investing.
