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ICICI Prudential Mutual Fund launches consumption-theme based ETF

NEW DELHI :

Asset management company ICICI Prudential Mutual Fund has launched an open-ended index exchange-traded fund that tracks Nifty India Consumption Index.

ICICI Prudential Consumption ETF, which will close for subscription on 25 October, will look to provide exposure to a diversified portfolio of companies representing domestic consumption. Kayzad Eghlim and Nishit Patel would be fund managers to the scheme.

As per India’s second-biggest asset manager, India’s population is constantly growing with each passing year, which will increase the consumption levels in every household, thus improving and enhancing the consumption sector.

The minimum investment during the new fund offer (NFO) period is ₹1,000 and in the multiples of ₹1, thereafter, with zero exit load.

Speaking on the launch, Chintan Haria, head-product development and strategy, ICICI Prudential AMC said, “Through this offering, an investor gets exposure to 30 large and mid-cap companies that are engaged in goods and services used on a daily basis catering to all age groups. With India being one of the fastest-growing economies, there is huge potential for growth across the household and industrial consumption segments. An investor can consider this offering as a part of their equity allocation.”

The company in a release highlighted that in terms of return potential, the Nifty India Consumption total return index (TRI) has outperformed Nifty50 TRI four out of eight times till 2020.

The Nifty India Consumption Index is designed to reflect the behaviour and performance of a diversified portfolio of companies representing the domestic consumption sector which includes sectors such as consumer non-durables, healthcare, auto, telecom services, pharmaceuticals, hotels, media and entertainment, etc.

In terms of sectoral composition, consumer goods had the biggest representation at 57.91% in The Nifty India Consumption index, followed by automobile at 17.06% and consumer services at 9.49%, as of 30 September.

Hindustan Unilever Ltd had the biggest weightage in terms of constituents at 10.16%, followed by ITC Ltd at 10.08%, Bharti Airtel Ltd. at 9.24%, Asian Paints at 8.32% and Maruti Suzuki India Ltd. at 5.55%.

Consumption as a theme has been largely unaffected by the covid-19 induced slowdown in the economy over the last 18 months.

To capture this theme, SBI Mutual Fund in July had launched SBI ETF Consumption, while Axis Mutual Fund in September had launched Axis Consumption ETF. Both these funds are based on Nifty India Consumption Index.

Nippon India Mutual Fund has one of the earliest ETFs based on the consumption theme that was launched in 2014. The fund with assets of ₹26 crore has delivered returns of 51.47%, 19.07%, 15.25% and 14.35% on one-, three-, five- and seven-year basis, respectively.

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