ICICI Prudential US Bluechip Equity Fund
An open ended equity fund focused on investing in large cap US equities.
Summary
| Type | Open-ended equity scheme | Benchmark Index | S&P 500 Index |
|---|---|---|---|
| Min. Investment: Additional Investment: | Lump sum - Rs 5,000 & in multiples of Re 1 thereof Systematic Investment Plan (SIP) Monthly Option - Rs 1,000 and in multiples of Re 1 thereof Quarterly Option - Rs 5,000 and in multiples of Re 1 thereof Rs 1,000 & in multiples of Re 1 thereafter | Exit Load | For redemption / switch-out within first 3 months from the date of allotment - 3% For redemption / switch-out after 3 months, but before 1 year (including last day of a year) - 1.00% For redemption / switch-out after after 1 year - Nil |
| Entry Load | Nil | Face Value | Rs 10 |
| Issue Opens | June 18, 2012 | Issue Closes | July 2, 2012 |
Investment Objective*
The investment objective of ICICI Prudential US Bluechip Equity Fund is to provide long term capital appreciation to investors by primarily investing in equity and equity related securities (including ADRs/GDRs issued by Indian and foreign companies) of companies listed on New York Stock Exchange (NYSE) and/or NASDAQ. However, there can be no assurance that the investment objective of the Scheme will be realized.
(Source:Scheme Information Document)
Is this fund for you?
ICICI Prudential US bluechip Equity Fund (IPUBEF) is positioned as a US centric fund investing in bluechip stocks listed on New York Stock Exchange (NYSE) and / or Nasdaq. Thus the fund offers Indian investors access to some industries which are, otherwise not accessible India. The United States (US) is a home to some of world’s largest companies (by market capitalisation) operating in Defense, Aerospace, Pharmaceutical, Computer Hardware, Toys and Social Networking among others. Moreover, the US is a critical market for global investors. It is noteworthy that, as per the latest reports of World Federation of Exchanges, the total market capitalisation of stocks listed on NYSE is 12 times more than those listed on the Bombay Stock Exchange (BSE).
Portfolio Strategy
While buying stocks for its equity portfolio; which will consist of equity and equity related securities listed on NYSE and / or Nasdaq, IPUBEF will follow a combination of both - top down as well as bottom approach of investing. Moreover, the portfolio of the fund will be tilted towards large cap companies selected from within the constituents of its benchmark - S&P 500 index. For researching equities, IPUBEF will depend on Morningstar Equity Research Services - MERS (one of the largest equity research groups in the world), since ICICI Prudential Asset Management Company Limited has tied up with them. ICICI Prudential Asset Management Company Limited intends to benefit from MERS’s expertise, efficiency, quality, a consistent and disciplined research approach for building it equity portfolio.
For building IPUBEF’s debt portfolio, ICICI Prudential Asset Management Company Limited aims to identify securities, which offer superior levels of yield at lower levels of risks. In order to control risk, the fund house aims to undertake rigorous in-depth evaluation of securities which are proposed to be invested. In addition the fund house will also study the following while building its debt portfolio:
- Macro economic conditions
- Political environment
- Liquidity conditions
- Interest rate scenario
| Instruments | Indicative Allocation Range (% to Total Assets) | Risk Profile High/Medium/Low | |
|---|---|---|---|
| Minimum | Maximum | ||
| Equity and Equity related securities* of bluechip companies listed on NYSE and/or NASDAQ | 65 | 100 | High |
| Fixed income securities of India as well as U.S including money market instruments, cash and equivalent, Treasury bills and fixed deposits | 0 | 35 | Low to Medium |
(Source:Scheme Information Document)
Fund Manager Profile
IPUBEF will be managed by the duo, Mr. Atul Patel and Mr. Chaitanya Pande. The US portion will be managed by the former, while the India portion will be managed by the latter.
Mr. Atul Patel – is a Fund Manager at ICICI Prudential Mutual Fund who has recently been given a responsibility to manage investments of all the schemes (offered by ICICI Prudential Mutual Fund) in American Depository Receipts / Global Depository Receipts and other foreign securities. Therefore overseas portion of ICICI Prudential US Bluechip Equity would be managed by him. Mr. Patel is a Chartered Account (CA) and also a Cost Account [CWA (Grad)]. He holds a bachelor’s degree in commerce. Mr. Patel has a total work experience of 3 years, out of which 2 years have been in research (as an analyst) at ICICI Prudential Muutal Fund.
Mr. Chaitanya Pande – He is the Head of Fixed Income at ICICI Prudential Mutual Fund. He holds a PGDBM from IIM, New Delhi along with a Bachelors’ Degree in Science from St. Stephens College, New Delhi. Mr. Pande brings with him over 41 years of experience in fund management. Prior to joining ICICI Prudential Mutual Fund, he was associated with Jardine Fleming AMC Pvt. Ltd.
At present, Mr. Pande manages ICICI Prudential Liquid Plan, ICICI Prudential Floating Rate Plan, All the Fixed Maturity Plans, ICICI Prudential Corporate Bond Fund, ICICI Prudential Flexible, Income Plan, All the Interval Funds, ICICI Prudential Long Term, Plan ICICI Prudential Ultra Short Term Plan, ICICI Prudential Medium Term Plan,ICICI Prudential Banking & PSU Debt Fund, ICICI Prudential Gold Exchange Traded Fund, ICICI Prudential Regular Savings Fund, Debt Portion – ICICI Prudential MIP 5, ICICI Prudential Multiple Yield Fund and Series 2, ICICI Prudential Capital Protection Oriented Fund, and Series II.
Outlook on US Economy and Markets:
After recording a stunning growth in the fourth quarter of 2011, real GDP of the US has witnessed a slump in growth rate (1.9% in the first quarter of 2012). The over-reliance on increasing debt ceiling, has led to the economy’s debt-to-GDP ratio too balloon at 103% until last year. It is noteworthy that in the last 71 years U.S. Congress has raised the debt ceiling 102 times, and in the last 3 decades there has been a 92% increase – rather aggressive and absurd. Moreover, the US still continues to stifle with stiff unemployment rate (8.2% in May 2012).
While consumer spending in the recent quarters has been steady, inflation has considerably dropped with cooling energy prices, epicentre of global financial crisis has shifted from US to Europe now, the US economy continues to remain the under the gloom clouds of debt-overhang situation in the Euro zone. Yes, in the recent past the US has reflecting strength and the US stock markets too have performed well (S&P 500 (benchmark index of the scheme) has been one of the top performing index over last 1 year), the economic headwinds from Euro zone will continue to steer the path for the US economy and markets, and thus given that how the decoupling theory falls in place remains a question.
Moreover, the advancing currency may now pose a threat to exports of United States. Furthermore, debt conundrum in US still remains unresolved and fiscal deficits are mounting. If these problems aggravate, there will be adverse impact on labour market and lately improved consumption.
Fund Outlook
Though ICICI Prudential US Bluechip Equity would help Indian investors diversify their portfolio; the real benefit of the diversification is questionable. The world has not decoupled and equities across the globe still move in tandem although the degrees vary. Moreover, if the Indian rupee recovers from the current levels it will erase the gains earned in US markets, if any. The fund may not be able to generate any meaningful returns till the rupee strengthens. Furthermore, the upside in the US equity indices looks limited at least till the economic growth garners pace and appears sustainable; which in last 5 years has not happened.
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