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Things to know before investing in ICICI Prudential Banking

The scheme seeks to optimize long-term capital gains of banking, financial and non-bank financial firms by investing in equities and equity-linked securities that are part of the banking and financial services industry. A large portion of the scheme’s assets will be invested in the stocks that make up the BSE Banks Index benchmark.

FUND MANAGERS

Education: Roshan Chutkey has done his engineering degree at IIT Madras, MBA at IIM Lucknow, and Masters in Finance from London Business School.

Experience: Since February 2015, he has been working with ICICI Prudential AMC, and has 12 years of overall industry experience.

Managed Funds:

  • ICICI Prudential Bharat Consumption Fund – Series 5 – From November 2018
  • ICICI Prudential India Opportunities Fund – From December 2018
  • ICICI Prudential Value Fund – Series 8 – Since April 2019

ICICI Prudential Banking and Financial Services Fund – Growth- details

  • Category: Equity: Sectoral-Banking and Financial Services
  • Launch Date: 01-08-2008
  • Asset Class: Equity
  • Benchmark: Nifty Financial Services TRI
  • Expense Ratio: 2.11% as on (31-01-2020)
  • Status: Open-Ended Schemes
  • Total Assets: 3,614.86 Cr As on (31-01-2020)
  • Turn over: 44.00

Portfolio Turnover Ratio: 78.00%. The total turnover ratio of the category is 94.57 percent. In the past year, the fund manager regularly changed portfolios compared to peers. (I.e., the fund manager held portfolio stocks/bonds for a more extended period than peers)

ICICI Prudential Banking and Financial Services Fund – Growth -Investment Details

  • Minimum Investment (₹): 5,000
  • Minimum Addl Investment (₹): 1,000
  • Minimum SIP Investment (₹): 100
  • Minimum No of Cheques: 6
  • Exit Load: There will be a 1% charge if the unit is redeemed within 15 days.

There are some essential questions that you have to address first:

  • Investment Period: If your investment horizon is long enough to invest in ICICI Prudential Banking and Financial Services Fund. Risk is high among sectoral funds as the fund will invest only in sector-specific stocks. So if your horizon is less than five years, those funds will not be enough.
  • Risk-taking ability: if you have the low risk-taking ability and you can’t handle volatility, then you’d be better off with a diversified fund.
  • Overall Portfolio Creation: It is essential to look at the portfolio from a holistic point of view, not just at the level of the fund. It should diversify your entire portfolio and help you increase your risk-adjusted returns. So if those funds go to a small part of your entire portfolio, then it should be fine. But if you continue these funds, then I would advise you to invest in some diversified equity funds first and then look at sectoral funds.

Suitability:

  • It is a fund that invests primarily in shares of banks and financial services firms.
  • We feel that investors should avoid funds with such a narrowly defined investment mandate. Instead, they should invest in multi-cap funds, which give the fund management team full freedom to invest in companies from which it expects to make the most profit.

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