ICICI Prudential AMC launches ICICI Prudential Equity Savings Fund – Series 1

Ludhiana, January 24, 2014: ICICI Prudential Asset Management Company has announced the launch of ICICI Prudential Equity Savings Fund, a close ended equity fund that focuses on investing in equity securities of companies which are likely to see expansion in Return on Equity over the next 3 years.

The fund aims at adopting a focused approach on select high conviction stocks which are likely to gain from factors such as the improving economy, a favorable regulatory change, change in the industry dynamics or company specific factors.

The portfolio will be managed by Manish Gunwani, Sr. Fund Manager and Venkatesh Sanjeevi, Fund Manager, ICICI Prudential Asset Management Company.

According to Nimesh Shah, MD & CEO, ICICI Prudential Asset Management Company, “The Indian economy with its latest macro indicators has been going through a rough patch causing equity markets, in general, and some very good quality, large companies, in particular, to be shunned by investors. These companies could be ones which are best poised for a bounce-back at the first sight of an improving economy. Such companies with an outlook for improving profits or Return on Equity (ROE) are expected to be good investment opportunities in today’s tough environment. The opportunity becomes even more compelling given the strong linkage between the country’s GDP growth, the ROE of these large companies and their price performance. We thus feel that it is an opportune time to make the most of modest equities that will be greatly impacted by the upcoming turn of positive economy indicators.”

The fund will be adequately diversified while not restricting itself to the benchmark sector weights. The fund is also valid for tax benefit under the RGESS.

Though foreigners have poured money by the billions, the Indian retail investor is still reluctant towards equity. Over the past few years, retail investors have been focusing on physical assets like real estate and gold. It is our belief that physical assets cannot be outperforming financial assets over long periods of time. Over the last 5 years, physical assets have outperformed financial assets. In our opinion, we are currently at the stage where financial assets have become extremely attractive from the long term investing perspective. There are a number of reasons for this contention.

Firstly, the Indian economy seems to have bottomed out in the second quarter of this fiscal year. Periods of low economic growth have historically been good periods to invest in equities. Equity markets typically tend to move ahead of the economy. By the time the news of good economic performance hits the headlines, the market may well have raced away. Historical indicators prove this contention.

Secondly, although retail investors have been staying away from the market due to volatility, historical indicators bring out that equities have given good returns post elections.

Given the good pointers to high potential returns from equities in the coming years, this is a good time for retail investors to correct the severe under-allocation to equities. Despite the risk of sounding repetitive and the lackluster equity returns in the recent past, the fact that equity as an asset class has proved to be the best wealth creator over long term needs emphasis. Retail investors have mostly missed the bus in the past and the same hopefully is not the story again. //india news, national news, equity savings fund news, indian equity savings fund news,