ICICI Prudential launches Multi-Asset Active FoF: Key details for investors
ICICI Prudential Mutual Fund has introduced a new fund of funds (FoF) that enables investors to access equity, debt, gold and silver through one investment vehicle.
Named ICICI Prudential Multi-Asset Active FoF, the scheme will be open for subscription from June 30 to July 14. It is an open-ended offering that seeks to dynamically adjust allocations across asset classes based on market trends, valuations and broader macroeconomic indicators.
Rather than depending on a single asset class, the fund will move its exposure among equity-oriented schemes, debt-oriented schemes and gold/silver exchange-traded funds (ETFs). For retail investors, the core proposition is diversification so that returns are not overly tied to the fortunes of any one segment of the market.
Where will the new fund invest?
The scheme will primarily invest in units of actively managed equity mutual funds, actively managed debt mutual funds, and gold or silver ETFs. The allocation to each asset class will be actively managed, with shifts driven by how attractive each category appears at a given time.
The indicative allocation band is as follows:
• 30–80% in active equity-oriented schemes
• 10–60% in active debt-oriented schemes
• 10–30% in gold ETFs and/or silver ETFs
Actual weights may vary depending on market conditions and the fund house’s investment framework. According to the asset management company (AMC), its proprietary valuation and macro models will guide these allocation decisions.
Tax treatment and key investment details
As per the fund house, investors who stay invested for at least 24 months will be eligible for long-term capital gains tax treatment.
Other important scheme features include:
• Minimum investment: Rs 1,000
• Plan options: Direct Plan and Regular Plan
• Benchmark index: 55% Nifty 200 TRI + 35% NIFTY Composite Debt Index + 7% Domestic Price of Gold + 3% Domestic Price of Silver
The scheme will be jointly managed by Dharmesh Kakkad, Manish Banthia, Akhil Kakkar, Sharmila D’silva and Gaurav Chikane.
How will the strategy be implemented?
The fund follows an active asset allocation strategy, allowing the managers to raise or cut exposure to equity, debt, gold and silver as market conditions evolve.
The investment approach is built around three main objectives:
• Using equity for potential long-term wealth creation
• Using debt for relatively stable income and lower volatility
• Using gold and silver for diversification and potential protection against inflation
The AMC has stated that it will rely on its internal frameworks to assess the relative attractiveness of each asset class, rather than trying to forecast which one will deliver the highest returns at any particular time.
Why is multi-asset investing drawing interest?
Different asset classes tend to behave differently across economic and market cycles. Equities often do well during periods of strong growth, while debt can provide stability when volatility rises. Gold typically serves as a diversifier during phases of inflation worries or geopolitical stress.
The fund house pointed out that leadership among equity, debt and gold has rotated frequently over various cycles, underscoring the importance of asset allocation in long-term investing. A multi-asset strategy seeks to smooth these cycles by spreading investments across several categories instead of relying solely on equities.
What should investors consider?
While a multi-asset fund can deliver diversification in a single product, it does not eliminate market risk. The scheme’s performance will ultimately depend on how the underlying equity funds, debt funds, gold ETFs and silver ETFs perform.
Because this is a fund of funds, investors should also be aware that both the FoF’s expenses and the costs of the underlying schemes will apply.
Investors need to assess whether the product aligns with their financial objectives, time horizon and risk tolerance before committing money. As with all mutual funds, investments are subject to market risks, and scheme-related documents should be read carefully before investing.
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