ICICI Prudential MF launches energy fund with eye on demand growth

Expects growing power demand, government's renewable push to generate value for investors

ICICI Prudential Mutual Fund (MF) has announced the launch of Energy Opportunities Fund, a thematic scheme which will look to ride the energy growth demand wave and capture the emerging opportunities in the renewables space.

“Energy is the cornerstone of industrial growth and economic development. With the ongoing transition towards renewable energy and the government's focus on achieving net-zero emissions, the energy theme offers significant growth potential. Through this scheme, investors can gain access to a diversified portfolio of companies across the energy value chain,” said Sankaran Naren, executive director (ED) & chief investment officer (CIO) of ICICI Prudential AMC.

The fund's investment universe will range from power ancillaries like engineering, procurement and construction (EPC) firms in the energy space to green energy and renewables, apart from the value chains of oil, gas and power sectors.

The fund house said a dedicated scheme for the sector makes sense as the government has brought in various reforms and there is clarity on the next five-year plan. The valuations, according to the fund house, are also comparatively better. 

“Even after the theme outperforming the broader market, valuation remains reasonable. Nifty Energy Index trailing PE is at 13.5x compared to Nifty 50 trailing PE at 21.4x,” the fund house said.

At present, there is only one thematic scheme — SBI Energy Opportunities Fund — investing in the energy sector and related stocks.

DSP MF and Tata MF also have a related offering. The three funds together manage nearly Rs 10,500 crore.