- An open ended income fund that provides flexible and dynamic portfolio management
- Systematic Transfer Plan (STP) Option for Systematic Equity Market Entry
ICICI Prudential AMC has bundled in Systematic Transfer Plan Option with the ICICI Prudential Income Opportunities Fund. The primary objective of the fund in the current scenario is to help investors ride on fixed income volatility and seek return with a dynamically managed income fund while gaining gradual and systematic entry into the equity market.
The Investment Philosophy of the ICICI Prudential Income Opportunities Fund is to provide flexible and dynamic portfolio management with the focus on capital gains and enhancing potential returns by utilizing volatility which is found to be suitable in a scenario where interest rates are likely to become volatile and range bound.
Some key features of the fund are:
- High portfolio liquidity to enable active management
- Active arbitrage across maturities and asset classes
- Judicious mix of G-Sec and PSU Bonds to be actively managed depending on interest rates and corporate spreads.@
- Likely modified duration range – 0 to 10 years
- Apart from the usual directional calls, the fund will be able to dynamically manage duration
@Please note this is the likely investment pattern given the fund’s mandate to be managed dynamically, it is not be construed as indicative portfolio and does not in any manner purport to be the accurate allocation. This is only an illustration and does not purport to be representation of actual performance of any scheme
Speaking on the fund, Mr. Nimesh Shah, Managing Director, ICICI Prudential Asset Management Company Ltd said, "At ICICI Prudential AMC we believe in providing investors with advice based investment solutions based on research and market direction. Systematic Transfer Option exercised through a flexible and dynamically managed income fund will help investors in systematic portfolio rebalancing in favor of equity while gaining advantage of the current interest rate trend through investment in fixed income. “
Some of the key reasons to invest in ICICI Prudential Income Opportunities Fund are –
Interest Rate Direction
- Variety of factors for and against decline in yields
- We are in a low interest rate regime and there is scope for yields to decline from these levels; with large volatility as market seems divided
Equity Markets are also attractive
- Earnings yield on equity is higher than yield on Government Bonds, last happened in bear market of 2002-03 bonds (Source – Nomura Research)
- Market Capitalization to GDP ratio is nearing the lows hit during the last bear market 2002-03(Source – CMIE)
- On-the-ground consumer spending continues to be robust helped by recent implementation of 6th pay commission and strong rural incomes because of higher Minimum Support Prices
CY09 will be a year for rebalancing allocation systematically in favor of equity. Debt may continue to give above average return for 2H FY10……as equity bottoms out
What should investors do then, invest in Income funds or Equity funds?
- Invest in ICICI Prudential Income Opportunities Fund and ride on fixed income volatility for 6 – 9 months
- Participate in fixed income volatility to generate return
- With interest rates, inflation and corporate earnings set to bottom out, switch money systematically into equity funds
- Opt for ICICI Prudential Income Opportunities Fund with Systematic Transfer Plan for 12 months and benefit from the changing macro environment
About ICICI Prudential Asset Management Company
ICICI Prudential Asset Management Company Ltd. is the joint venture between ICICI Bank, a well-known and trusted name in financial services in India and Prudential Plc, one of UK’s largest players in the financial services sectors. ICICI Prudential Asset Management Company, in a span of just over ten years, has forged a position of preeminence in the Indian Mutual Fund industry as one of the largest asset management companies in the country with average assets under management of around Rs. 47,560.29 Cr as on January 31, 2009 (Source: www.amfiindia.com). The Company manages a comprehensive range of schemes to meet the varying investment needs of its investors.
