ICICI Prudential Mutual Fund has announced the launch of a new exchange-traded fund (ETF). The ICICI Prudential Nifty 200 Quality 30 ETF will aim to provide returns corresponding to the returns provided by the Nifty 200 Quality 30 Index, ICICI Mutual Fund said in a release on July 21, 2023.
“The scheme will invest in constituents of Nifty200 Quality 30 Index. The Nifty200 Quality 30 Index represents the top 30 companies based on ‘Quality’ Score from Nifty 200 Index. The scheme will have exposure to companies having higher profitability, lower leverage and more stable earnings,” ICICI Prudential Mutual Fund said in the release.
The new fund offer opened on July 21, 2023 and will close on August 4, 2023. The minimum investment amount will be Rs. 1,000 and in multiples of Re. 1
ETFs are passively managed mutual fund schemes tracking a benchmark index and reflect the performance of that index subject to tracking error.
According to ICICI Prudential Mutual Fund, there are multiple reason why one should consider investing in this scheme.
It offers the opportunity to diversify equity investments across various sectors and in companies having strong cash flows. It has the potential to outperform against the broader market indices. The companies selected under the ETF have high valuation, and lastly, it allows investors to select companies with a minimum investment of 1 unit on the stock exchange in terms of creation of unit size.
ICICI Prudential Mutual Fund further said that the quality score for each company has been determined based on return on equity (ROE), financial leverage (debt/equity ratio) and earning (EPS) growth variability analysed during the previous five years.
“Thirty companies with higher profitability, lower leverage and more stable earnings are selected to be part of the index. The stock weight is capped at the lower of 5 per cent or 5 times the weight of the stock in the index based on free float market capitalisation,” ICICI Prudential Mutual Fund said in its release.
Chintan Haria, head, investment strategy, ICICI Prudential AMC said, “ICICI Prudential Nifty 200 Quality 30 ETF is a smart beta offering based on quality as a factor. The offering provides investors with an opportunity to diversify equity investments across various sectors and in companies having strong cash flows. The index has historically provided better dividend yield than Nifty 200 TRI and Nifty 50 TRI.”
