New Fund Offer from ICICI Prudential Mutual Fund: India’s first Nifty Auto Index Fund. Check Details

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ICICI Prudential Nifty Auto Index Fund (NFO) Details: ICICI Prudential Mutual Fund today (September 21, 2022) announced the launch of the ICICI Prudential Nifty Auto Index Fund, which will give investors an opportunity to earn from the expected growth in the automobile sector, including the EV segment.

In a statement, ICICI Pru MF said this is India’s first Auto Index Fund which will try to replicate the Nifty Auto Index that has grown at over 14% annually since August 2012.

“In terms of volume, by 2030, India is expected to be the world’s third-largest automotive market. We believe through ICICI Prudential Auto Index Fund; investors will be able to tap into the evolving space of the Indian automobile industry. With India being an emerging global hub for auto component sourcing coupled with the Government support for electric mobility, we believe this space is likely to be under the spotlight,” Chintan Haria, Head – Product Development & Strategy, ICICI Prudential Mutual Fund, said during the launch of the index fund.

Also Read: SBI MF launches 3 Target Maturity Funds to provide indexation benefits, tax-efficient returns.

Nifty Auto Index Performance

ICICI Pru MF said that Nifty Auto TRI has outperformed Nifty 50 TRI 7 times till 31st August 2022. The index has grown at 14.21% annually since August 2012. “Rs.1,00,000 invested in the Nifty Auto Index in 2012 would be worth Rs. 3,77,713.6 by end of August 2022,” the mutual fund house said basis the MFI Explorer tool of ICRA Online Ltd.

The statement further said that Nifty Auto Index reflects the behaviour and performance of the automobile segment of the financial market. The universe for the offering is Nifty 500. No single stock shall be more than 33% and weights of top 3 stocks cumulatively shall not be more than 62% at the time of rebalancing.

The index is rebalanced semi-annually in March and September respectively.

Key points to know before investing

  • Past returns of a mutual fund scheme or an index should not be taken as a guarantee that they will repeat the performance in future as well.
  • As per the SEBI’s Riskometer, the new auto index fund from ICICI Pru MF falls in the “very high” risk category.
  • The scheme may benefit investors looking for long-term wealth creation. 
  • Rising individual income has the potential to grow and boost the auto industry. The EV market is expected to grow at a CAGR of 49% between 2022-2030 and is expected to hit 10 mn-unit annual sales by 2030
  • The Government aims to develop India as a global manufacturing center and a Research and Development (R&D) hub
  • Under NATRiP, the Government of India is planning to set up R&D centres at a total cost of US$ 388.5 million to enable the industry to be on par with global standards
  • Skilled labour at low cost, robust R&D centres, and low-cost steel production provides great opportunities for investment
  • Auto exports have begun to rise.
  • The Sector is cyclical in nature and the ICICI Prudential Nifty Auto Index Fund aims to perform when opportunities arise and market demand rises

Also Read: NFO alert: SBI Mutual Fund launches mid-cap and small-cap equity index funds. Should you invest?

NFO Dates

The NFO will open on September 22, 2022, and close on October 06, 2022.

(Disclaimer: The article is for information purposes only based on a release from ICICI Prudential MF. Investing in mutual funds is subject to market risks. Please read the offer document and consult your financial advisor before investing)

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