Icici Premier To Be Converted Into Balanced Scheme
ICICI Premier, a closed-ended mutual fund scheme launched in November 1993 by the then ICICI Mutual Fund, will be converted into a balanced scheme through a roll over option for investors. The portfolio of the scheme will be restructured into a closed-ended balanced fund with 60 per cent corpus in debt securities and 40 per cent in equity of only multinational companies.
The equity component will comprise of companies that have, in the past five years, outperformed the stock market by 98.9 per cent.
This would also imply that about 18 stocks worth nearly Rs 40 crore in the existing portfolio of about 40 will be divested. These include MTNL, SBI, HPCL, Cochin Refineries, Bajaj Auto, BPCL, ONGC, BSES, Reliance Industries, Bhel, Sterlite Industries, Hindalco, Asian Hotels among others.
The corpus of the scheme is Rs 110 crore with 2.9 lakh unitholders. Net asset value as on October 28 is Rs 7.35 per unit. The AMC has also formulated a new definition for MNC companies for the scheme. As on July 31, 1998, the scheme has 84.10 per cent of its corpus invested in about 40 scrips.
According to Sandeep Bhandarkar, head of sales and distribution at Prudential ICICI AMC, ICICI Premier is due for redemption on February 7, 1998. With the approval of the trustee, Prudential ICICI Trust, the scheme will be rolled over for a further period of five years with effect from February 7, 1999.
The revised scheme will start with the net asset value of ICICI Premier. "There will be no change in the corpus. As a result, the scheme has to start operations at the same level," Bhandarkar said.
The AMC has already received a no objection certificate from the Securities and Exchange Board of India (Sebi).
"We have defined MNCs as listed companies, where either a foreign company holds a strategic stake or where Indian promoters have manufacturing, marketing or service facilities in more than one country. The revised investment pattern will provide a portfolio with steadier returns and lower risk profile as compared to a completely equity-based portfolio," he said.
The AMC has also assessed the performance of these MNC stocks.
"We have found that MNC stocks in the last five years have offered a cumulative return of 103 per cent. Even if the value of the equity portion in the balanced scheme disappears in five years, the investor will still have an inbuilt safety net for his initial investment due to the investment in debt," he added.