ICICI Prudential Mutual Fund has announced the launch of ICICI Prudential Contra Fund, an open ended equity scheme following a contrarian investment strategy. Contrarian investing rests on the idea that markets often misprice assets, and that mispricing is a natural characteristic of every asset class, whether equity, debt or real estate.
The new fund offer or NFO of this contra fund is open for subscription and will close on October 12.
The scheme takes a non-consensus, research-driven approach to identifying such opportunities and is aimed at investors with a long-term horizon who are willing to wait for the sentiment to reverse, according to a press release by the fund house.
The scheme will be managed by Sankaran Naren, along with Dharmesh Kakkad, Sakshat Goel, Gaurav Chikane. The performance will be benchmarked against Nifty 500 TRI. The minimum investment amount is Rs 1,000 (& in multiples of Re 1).
“Contrarian investing is not just about buying cheap. It requires robust research and a long term outlook. The beauty of contrarian investing is that we will buy when a stock is out of favour, when there are more sellers than buyers and the price has therefore fallen substantially,” said S Naren, ED & CIO, ICICI Prudential Mutual Fund.
He further added, “The scheme has the flexibility to invest across market capitalisations, but our prime focus will be to identify underperformers. The key is to identify the suitable investment through research and have the patience to wait, because a contrarian situation does not turn around quickly.”
The scheme’s contra strategy can rest on any single factor or a combination of factors, organised under the VCTS framework.
The fund house said that in terms of portfolio construction, the aim is to adopt a CLOUD approach which stands for Calculate: Research and calculate before taking the call, Leverage: Be careful with leveraged stocks, Ownership: Low institutional ownership can be a positive, Upside: Clear upside potential, and Disruption: Caution around Disruption risk.
The fund is suitable for investors who are seeking long term wealth creation and want an open ended equity scheme following contrarian investment strategy.
The fund will allocate 80-100% in equity & equity related instruments following contrarian investment strategy, 0-20% in other equity and equity related instruments, 0-20% in money market instruments, other liquid instruments, units of overnight funds, liquid funds and money market funds, 0-20% in Gold ETFs and Silver ETFs and 0-10% in units issued by INVITs .
The scheme shall follow a top-down approach and/or bottom up approach. The scheme may follow a diversified approach & have flexibility to invest across market capitalization. However, at times the scheme may have higher concentration towards a particular market capitalization, sector or stocks.
During various market cycles that may have bullish, bearish or neutral sentiments, the scheme may adopt various strategies that focus on portfolio optimization and risk management. For the purpose of risk management, the scheme may adopt various hedge and non-hedge derivative strategies.
(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of The Economic Times)
If you have any mutual fund queries, message ET Mutual Funds on Facebook/Twitter. We will get them answered by our panel of experts. Do share your questions at [email protected] along with your age, risk profile, and Twitter handle.
