Mumbai: Prudential ICICI Mutual Fund, Indias largest private sector mutual fund, has launched a new scheme, PruICICI Dynamic Plan, which facilitates active participation and investment agility to make the most of market conditions.
The Indian stock markets are increasingly sector-driven. Over a period of time, the indices may show a gradual increasing decreasing or even range-bound trend. And there could be intermittent bouts of volatility. However, because the constituent sectors drive the overall indices (and the sectors might be few or many), investors need an investment solution with the flexibility to invest across sectors based on their attractiveness at various points in time.
Also, if the situation calls for the need to be diversified, then the fund should also have the ability to diversify across various sectors. The PruICICI Dynamic Plan has the capability of making the most of these situations.
In case of a prolonged decline in the equity markets, the Dynamic Plan has the ability to switch to cash and / or debt instruments, which would attempt to arrest any further decline in the investments. Hence the investor need not stay invested in equities at all times, especially when the markets exhibit a prolonged decline.
In the case of an investor investing directly into equity, he faces a disadvantage due to the incidence of short-term capital gains tax, which can be as high as 30 per cent while booking profits on investments held for less than an year. (Active management of equity portfolios by investors directly investing in equities requires regular profit booking, which leads to short-term capital gains.)
By investing in the Dynamic Plan for over an year, the investor not only gets the advantage of active and astute equity management, but also the advantage of tax benefits, as the investor needs to pay only a minimal of 10 per cent tax on long-term capital gains.
The Dynamic Plan is ideal for investors who are seeking avenues for possible long-term capital appreciation, and looking to invest in equities. The plan is suitable for investors with an investment horizon of two to three years. From the tax point of view, it is advisable for the investor to look at a minimum one-year-plus horizon.
PruICICI Dynamic Plan at a glance
Type of scheme
|Open-ended equity fund|
|Investment objective ||The primary investment objective of the scheme is to seek to generate capital appreciation by actively investing in equity and equity-related securities. For defensive considerations, the scheme may invest in debt and money market instruments, to the extent permitted under the regulations. The AMC will have the discretion to completely or partially invest in any of the type of securities stated above so as to maximise the returns. But there can be no assurance that the investment objective of the scheme will be realised, as actual market movements may be at variance with anticipated trends.|
|Asset allocation ||0 - 100% = Equity and equity-related securities 0 - 100% = Debt and money market instruments|
|Offer price ||Rs 10 per unit during the initial offer period and thereafter at the applicable NAV|
|Investment option ||Cumulative option|
|Transparency ||NAV will be calculated and declared on every business day|
|Minimum investment ||Rs 5,000 (plus in multiples of Re 1) and a minimum additional investment of Rs 500|
|Entry / exit load ||Entry load: 1.75 per cent; exit load: nil|
|Service features ||Switch facility available Redemption cheque issued within three business days Systematic investment plan and systematic withdrawal plan facility available|