ICICI Prudential Mutual Fund Launches ICICI Prudential Innovation Fund NFO

ICICI Prudential Mutual Fund has announced the launch of ICICI Prudential Innovation Fund, an open-ended thematic equity scheme which will predominantly invest in equity, equity related securities of companies and units of global mutual funds/ETFs that can benefit from innovation strategies and themes. The scheme will follow a bottom up approach and can take exposure to companies involved in product/services/solution related innovation. The scheme can invest across market cap, basis suitable opportunities.

Historically, it has been observed that innovating companies tend to outperform non-innovating players as they fare better in terms of organic growth through innovation thereby providing better opportunities for wealth creation. (Source: Source: Mc Kinsey & Company) This becomes significant especially given that innovation diffusion is happening at a rapid pace. For example: Telephone took 66 years to achieve a 50% penetration while smartphones took just seven years to achieve the same feat. (Source: Asymco, Visual Capitalist)

It is generally perceived that innovation is purely technological in nature. But in reality, innovation can be as simple as invention of wheel to complex/modern techniques such as Artificial Intelligence (AI). In the last decade, innovation has picked-up pace as compared to previous decades. Broadly, innovation can be of three types – Radical innovation (Replace an existing product with a brand new one), Disruptive Innovation (New affordable products & services catering to large customer base) or Incremental Innovation (Upgrades to existing products / services / process / methodology). 

Speaking on the launch of the product, Mr. Chintan Haria, Head -  Investment Strategy, ICICI Prudential AMC said, “As countries look to become increasingly self-sufficient in terms of resources, innovation as a theme is likely to do well going forward globally and domestically. With the deployment of 5G technology, a wide gamut of sectors/industries stand to benefit and India already has a robust ecosystem in place for nurturing innovation.” He further adds, through this offering an investor will have access to companies involved in product/service/solution related innovation both in India and overseas. Given that innovation can happen anywhere, our research team will track sector/theme specific trends.” 

Innovation in IT and Pharma sectors (few examples) 

The above is for illustration purpose only. The sector(s)/stock(s) mentioned in this slide do not constitute any recommendation and ICICI Prudential Mutual Fund may or may not have any future position in this sector(s)/stock(s).

About the Scheme
The scheme will invest a minimum of 80 per cent in companies adopting innovation strategies and themes & Overseas Securities adopting innovation strategies and themes. The scheme will be both sector and marketcap agnostic. The scheme may invest upto 20 per cent of its net assets in ADR / GDR / Foreign securities / Mutual Funds / ETFs.

Undercurrents favoring Innovation Theme
Pandemic: Importance of supply chain diversification was best realized during the pandemic leading to good scope for innovation

Geo-Politics: Uncertainties around Russia-Ukraine War, US-China tensions have probed countries to look for better options to reduce dependencies

Inflation: As countries look to counter high inflation with domestically manufactured products, innovation could do well

Normalizing interest rate environment: As globally and domestically, Central Banks seem to approach fag end of interest rate hike cycle, growth stocks may perform well. Given that the scheme is likely to have a growth bias, this strategy tends to do well in a normalizing interest rate environment.  

The scheme will be managed by Anish Tawakley and Vaibhav Dusad. Overseas investment will be managed by Sharmila D’Mello. The benchmark of the scheme is Nifty 500 TRI.

Riskometer & Disclaimers:

# It may be noted that the scheme risk-o-meter specified above is based on the internal assessment of scheme characteristics and may vary post NFO, when the actual investments are made. The same shall be updated in accordance with provisions of SEBI circular dated October 5, 2020 on Product labelling in mutual fund schemes on ongoing basis.

The asset allocation and investment strategy will be as per SID of the scheme.

Mutual Fund investments are subject to market risks, read all scheme related documents carefully