ICICI Prudential Global Stable Equity Fund - A Fund of Fund

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ICICI Prudential Global Stable Equity Fund

 

This fund focuses on owning long-term global winners which are able to deliver superior risk-adjusted returns

 

ICICI Prudential mutual fund has launched an international fund - ICICI Prudential Global Stable Equity Fund. It is a fund of fund (FoF) that will invest in Nordea 1- Global Stable Equity Fund- Unhedged.

 

Objective

 

Nordea 1- Global Stable Equity Fund- Unhedged aims to invest in stable companies globally to outperform the market over full market cycle with roughly two-thirds the volatility of MSCI World Index.

Investment strategy

 

Talking about its investment strategy, Nordea 1- Global Stable Equity fund follows a computer driven, purely quantitative approach in selecting stocks with stable returns.

Through this process the fund narrows down on companies with established lines of business, generating consistently stable earnings, dividends, cash flows, etc. The stability helps dampen price volatility of such companies, making them less risky than broader markets.

 

The fund focuses on owning long-term global winners which are able to deliver superior risk-adjusted returns.

 

The fund diversifies its risk by spreading its investment over 100-150 stocks. It has put lower and upper-cap on its exposure to a single stock. The fund doesn't hold more than three per cent of its assets in a single stock and also puts a cap of 1.5 per cent on the lower side of investment in a single stock.

 

The fund is managed by Claus Vorm who is a PhD. Mathematics and Economics and Robert Naess who is MBA, B.Sc. Computer Science.

 

Cushions the fall

 

Although with a value based approach the fund may look boring during the market upturns, but it has compensated investors with a better downside protection.

The fund has been benchmarked against MSCI World- Net Return Index. The fund underperformed its benchmark in 2010 as it delivered a return of 14.83 per cent compared to 19.53 per cent delivered by its benchmark. But in 2010, when its benchmark lost 2.38 per cent the fund actually delivered a gain of 10.66 per cent.

 

Cost and exit load

 

The fund can charge a maximum expense of 2.50 per cent, including the expense of underlying fund. Apart from it, 20 basis points can be charged in lieu of exit load and 30 basis points for gross inflows from specified cities.

 

The AMC may also charge service tax on investment and advisory fees.

 

If the investments are withdrawn before three months an exit load of 3 per cent will be applicable. For investments withdrawn after three months but before 18 months 1 per cent of the NAV will be applicable and after that there won't be any exit load on redemption.

 

Should you invest?

 

The fund provides an international exposure to those looking to diversify the portfolio internationally but its value based approach may not appeal to those who want to ride on momentum as it would require long-term investment. Also, the currency movement will play a vital role in determining the returns of the fund.

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