ICICI Prudential MF floats open-ended scheme based on business cycle

ICICI Prudential MF has launched ICICI Prudential Business Cycle Fund, an open-ended scheme that aims to identify and invest in opportunities across sectors, themes, and m-caps, based on the prevailing business cycle. 

The fund will employ a top-down approach using macro indicators such as inflation, growth, and deficit, and scout for opportunities in the Nifty 500 universe. The NFO closes on January 12.

“Most of the events that have a marked impact on the markets cannot be predicted. What we do is to keep looking at the business cycle, understand where we are placed in terms of that cycle to make an investment call,” said S Naren, ED and CIO of ICICI Prudential MF. 

For example, he says, during March 2020 — when the markets witnessed a sharp correction — an investor whose approach was business cycle-oriented would have understood we are at a market bottom and central banks will step in to stem the market fall.

The investment decision and sectors in which the fund will have exposure to, will be largely guided by the business cycle. 

The aim, he says, is to identify sectors and take exposure to names within them. At any given point in time, the fund will have exposure to 3-5 sectors and exposure within these sectors will be diversified in nature. 

The exposure to small and midcap names will be minimal except at times when the fund house is bullish on the domestic cycle.

“More than the filters, we will be having a holistic approach with fund managers both from equity and debt side for portfolio construction. This is because business cycle evolves not only in the equity space, but also in debt and credit space,” said Naren.