ICICI Prudential Mutual Fund has announced the launch of ICICI Prudential Flexicap Fund, an open-ended equity scheme which aims to provide capital appreciation by investing in equity and equity-related securities across market capitalisation, based on an in-house market cap allocation model.

The fund will follow a mix of top-down and bottom-up approach to identify opportunities in large, mid and small cap space. The investment universe considered will be the S&P BSE 500. The stock selection can be based on parameters such as company fundamentals and valuations.

“Flexicap is one category among the equity schemes which is the most flexible among the equity scheme offerings. The ICICI Prudential Flexicap Fund has the flexibility to invest across large, mid and small cap space without any restriction,” Nimesh Shah, MD & CEO, ICICI Prudential AMC said.

“We will be guided by our in-house market cap allocation model to provide direction and help ascertain the right allocation to various market caps. Further, based on macro-economic factors and business cycle, the fund manager may fine tune the allocation suggested by the model, which will be in line with the SID at all times. This complete combination of flexibility with control, we believe, will help investors comfortably navigate across market conditions, and aid in reaching their financial goals effectively,” Shah said.

The large, mid and small cap allocation will be assessed and re-balanced on a periodic basis, based on an in-house model and in line with asset allocation of the scheme. This model comprises parameters such as valuation, Relative Strength Index Differential and market cap weight as a percentage of total market cap. Cues from various economic indicators such as business and economic fundamentals, driven by in-depth research techniques, employing strong stock selection, long-term growth prospects, inflation, current account deficit or surplus and fiscal deficit too can be considered while building portfolio of companies. The scheme will follow the investment strategy as mentioned in the SID.

The idea here is that during volatile times, large caps tend to limit downside and can provide liquidity to the portfolio. On the other hand, with expected economic recovery after the lockdowns, mid and small caps may be better positioned to capture potential upside in the economic recovery.

The scheme is being managed by Senior Fund Manager Rajat Chandak and overseas investments will be managed by Fund Manager Priyanka Khandelwal. ICICI Prudential Mutual Fund has one of India’s largest and experienced investment and research team led by S Naren, who is well known for his calls on macros and market cycles.

The New Fund Offer (NFO) opens on June 28, 2021 and closes on July 12, 2021.

This is a viewpoint article