ICICI Prudential Mutual Fund on Monday launched a new fund offer for its ICICI Prudential Innovation Fund, targeting “innovation strategies and themes” across the business spectrum.
This open-ended scheme will predominantly invest in equity and equity-related securities of companies, units of global mutual funds, and exchange-traded funds ETFs that can benefit from innovation.
The fund house plans a bottom-up approach for the scheme, with exposure to companies involved in products, services, and solution-related innovation across market capitalization.
Speaking on the product launch, Chintan Haria, ICICI Prudential AMC’s head of investment strategy, said: “As countries look to become increasingly self-sufficient, innovation as a theme is likely to do well globally and domestically. With the deployment of 5G technology, a wide gamut of sectors and industries stand to benefit, and India already has a robust ecosystem in place for nurturing innovation.” He added that the scheme gives investors access to innovating companies globally.
Innovation Brings Opportunities
Quoting global management consulting firm McKinsey & Company, ICICI Prudential said innovating companies usually outperform non-innovating players, providing better opportunities for wealth creation. It becomes significant especially given that “innovation diffusion” is taking place rapidly.
To support the point, it cited findings from Asymco, a visual capitalist, which noted that the telephone took 66 years to achieve a 50 per cent penetration while smartphones took just seven years to achieve the same feat.
About The Scheme
The scheme will invest at least 80 per cent of its resources in companies adopting innovation strategies and themes in India and overseas, covering various sectors and market caps.
In addition, the scheme may invest up to 20 per cent of its net assets in American Depository Receipts (ADRs), global depository receipts (GDRs), foreign securities, mutual funds, and ETFs.
The NFO runs from April 10 to April 24, 2023. This open-ended equity scheme will track innovation across the business spectrum, which is expected to drive growth as “countries look to become increasingly self-sufficient in terms of resources”.
Besides domestic equities, it will also have the flexibility to invest in overseas securities. The scheme’s benchmark is Nifty 500 TRI. It will be managed by Anish Tawakley, Vaibhav Dusad, and Sharmila D’Mello.
Why Innovation Is the Buzzword
The Covid-19 pandemic has highlighted the need for global supply-chain diversification and, as a result, has opened the doors for innovation. Also, the uncertainties over Russia-Ukraine War, US-China tensions, etc., have forced countries to look for better options to reduce dependencies.
Additionally, the fund house noted that innovation as a theme could do well as countries look to counter high inflation with domestically manufactured products. Moreover, it said, as the interest rate hike cycle of central banks globally could be at the far end, growth stocks may perform well.
Finally, innovations as simple as the wheel to modern techniques, such as Artificial Intelligence (AI), have brought new opportunities and paved the way for economic growth. The fund house notes that in the last decade, innovation has picked up pace as compared to the previous decades.
