PrudentialICICI AMC unveils Discovery Fund

Prudential ICICI AMC has launched a new 'Discovery Fund'. This fund is based on the concept of value investing and will invest in companies that are available at a discount to their intrinsic value.

The initial public offer for the new fund opens on July 9. Pankaj Razdan, managing director, Prudential ICICI Asset Management Company Ltd, said, "We are providing investors an opportunity for diversification. In Wednesday's market when most equity portfolios are similarly placed in terms of price-to-earnings multiple, there are very limited opportunities for hedging downside risks. With the value investment style, a portfolio consisting of value stocks is therefore likely to complement the fund."

Pru ICICI Mutual Fund officials said that the Discovery Fund is an open-ended scheme that aims to provide long-term capital growth by investing primarily in a well-diversified portfolio of companies accumulated at a discount to its fair value.

A senior fund manager said that the fund will invest between 80 per cent to 100 per cent in equity and equity-related instruments and between 0 per cent to 20 per cent in cash and money market instruments.

Explaining their investment strategy, the officials added that Pru ICICI Discovery Fund will invest in fundamentally strong companies that are available at a discount to their fair value.

Few important financial parameters that the fund will use for stock picking are price-to-book ratio, the price-to-earnings ratio, dividend yield, price-to-sales ratio, free cash flow and enterprise value to net realisable asset value.