ICICI Prudential has launched the ICICI Prudential Energy Opportunities Fund, an open-ended theme-based Equity mutual fund. Energy is an integral part of our lives. It is used in our daily lives via electric lights, a gas stove, televisions, air conditioners, induction stoves microwaves, cars, two-wheelers etc. So why not invest in such opportunities that are based on our daily needs only?
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Investment Strategy
The fund aims to provide long-term capital appreciation by investing predominantly in equity and equity-related securities of companies engaged in the energy and energy-related sectors.
The fund’s investment strategy is, identifying and investing in companies across various sub-sectors within the energy domain.
The fund managers employ a bottom-up stock selection approach, focusing on companies with strong fundamentals, robust business models, and attractive valuations.
Other funds in energy theme investment are SBI Energy Opportunities Fund, DSP Natural Resources and New Energy Fund and Tata Resources & Energy Fund.
Where money is invested?
- Power ancillary industries – heavy electrical equipments, energy efficiency
- oil and gas- petrochemicals, refining, marketing , lubricants etc
- renewable energy- solar, wind, hydrogen, bio & alternate fuels
- Green Energy – gas transmission, city gas distribution, LNG terminal
- Power – coal producer, power generation, transmission & trading
- Large cap buys companies
- Investing and companies with long term bias
What is the Nifty Energy Index (fund-tracked Index)
The Nifty Energy Index is designed to reflect the behaviour and performance of a diversified portfolio of companies representing the commodities segment including sectors such as Petroleum, Gas and Power etc.
Why should you invest in the ICICI Energy Opportunities Fund?
India’s energy demand is expected to grow significantly over the next decade
- Renewable energy sources are getting traction driven by global and national initiative
- Energy theme-based investment
- Nifty Energy Index has outperformed the broader market recently. The Index valuations are reasonable, and investors may consider this scheme from a long-term perspective.
- There is a gap between India’s energy Demand & supply chain.
Who should invest in ICICI Pru energy opportunities fund
- Looking for long term growth through exposure in energy theme
- seeking diversification within an equity portfolio
- interested in capitalising on the transition towards renewable energy while also focusing on traditional businesses
ICICI prudential Energy opportunities Fund -NFO details
NFO Open-2nd July 2024
NFO Close -16 July 2024
Fund type-Open-ended fund
Minimum investment– Rs 5000 & in multiple of Rs. 1
Entry load– not applicable
Exit load -Redemption in less than 3 months -1% of fund
Redemption after 3 months- nil
Benchmark index- Nifty energy TRI
Risk category -high risk
Fund manager– Sankaran Narayan and Nitya Mishra, The overseas investment will be managed by Sharmila d Mello
Conclusion
The ICICI Prudential Energy Opportunities Fund offers investors a unique opportunity to participate in the energy sector’s growth.
ICICI energy fund aims to give better long-term capital appreciation with theme theme-based investment approach, active management, and diversification within the energy sector.
However, potential investors should carefully consider their risk tolerance and investment horizon before committing to the fund, given the inherent volatility and risks associated with the energy sector.
The fund’s future performance largely depends on Govt. Policies and people’s behavioural changes as per the projected energy consumption changes.
Thematic funds focus on highly specific themes, sectors, or trends rather than broad markets. The theme funds can give good returns if the theme performs well. But, such funds possess higher risks (concentration risk, market timing risk, sector-specific risks and regulatory and political risks) as compared to other funds.
What should investors do?
The fund can be added as a diversification in the portfolio for returns. However, the fund should not be the portfolio’s core as this can be highly risky.
As with any investment, it is advisable to consult with a financial advisor to determine if the ICICI Prudential Energy Opportunities Fund aligns with your overall investment objectives and risk profile.
