Pru ICICI launches Fusion Fund

The closed-end fund comes with a five-year maturity and quarterly repurchase option.

Prudential ICICI has launched Fusion Fund, a closed-ended diversified equity scheme with a five year maturity and quarterly repurchase option.

"One can see India going the Gujarat way, where even a horse-cart driver's children in a small town use computers. Banking on the growth potential of Indian economy, we plan to follow a bottom-up approach while investing through Fusion Fund. We believe that if we choose the right businesses to invest in, it does not matter even if we enter the markets at 10,000 levels," said Nilesh Shah, chief investment officer, Pru ICICI.

Managing Director Pankaj Razdan feels that as a close-ended fund, Fusion Fund seeks to capitalise on the fact that the long-term equities have the potential to deliver returns in line with earnings growth.

The fund would aim at investing in businesses and not in stocks. Even if the markets have touched 10,000, good companies don't stop making profits. The close-ended nature of the fund serves its long-term purpose, according to Razdan.

The Fusion Fund is meant for long-term investors. It seeks capital appreciation with about 70-100 per cent investments in equity. The minimum investment amount is Rs 5000 and it does not have any entry load.

There is an exit load depending upon when the amount is redeemed. It proposes to provide repurchase facility on every 15th day from the end of every quarter. The new fund offering is from February 1 to February 27.

Of-late there has been a resurgence in close-end funds. Recently, HDFC and Franklin Temeplton launched a close-end equity fund each.

Closed-end funds usually tend to do better than their open-end counterparts as the fund manager does not have to grapple with redemption every now and then. Instead, the manager can take a longer term view on stocks without worrying about withdrawals.

Closed-end funds went out of favour in the country, and also rest of the world, as these funds offered liquidity only through listing on the bourses.

With fewer buyers for units on the bourse, these funds traded at substantial discount to the net asset value on the bourses.

However, now mutual funds are veering around this by making repurchase option available every quarter and avoiding listing on the bourses.