NFO Analysis: ICICI Prudential MNC Fund

ICICI Prudential Mutual Fund, one of the largest fund houses, has launched an open-ended equity scheme that aims to invest in stocks of multinational companies (MNCs). The new scheme started for subscription on 28 May 2019 and will end on 11 June 2019. This is a thematic fund and third in the industry targeting MNC stocks. The other funds that are in this category are Aditya Birla Sun Life MNC Fund, SBI Magnum Global Fund and UTI MNC Fund.

Objective: It is an open-ended equity diversified fund that would majorly invest in equities and equity-related securities of companies within MNC space. The primary objective of the scheme is to generate long-term capital appreciation by investing in these companies.

Strategy: There are around 120 companies listed in Indian bourses that have can be characterised as MNC companies owing to the foreign shareholding of over 50 per cent. Nonetheless, fund’s universe of stock also includes companies incorporated in India with business operations across the globe and foreign companies having business operations across the globe but not listed on Indian Stock exchanges. The fund will select and invest in these companies based on bottoms-up approach. There is no limitation on market cap or sector weightage, however, the fund intends to build high quality and diversified portfolio.

Fund Manager: The scheme will be together managed by Anish Tawakley and Lalit Kumar. Priyanka Khandelwal will be handling investment in overseas securities. Anish Tawakley manages a couple of funds, a major one among these being ICICI Pru Bluechip Fund with asset under management (AUM) at Rs. 21,846 crore and returns generated by this funds in the last one year is around 9.4 per cent.

Our Recommendation:

In the last one year, MNC category has underperformed the frontline market and has given an average return of 1.45 per cent. Against this, the BSE Sensex has given a return of 13.22 per cent. Tracking the past performance of the MNC index we see that in the long run, they have outperformed the frontline indices.

Looking at the annual returns, however, there is no visible trend on how the category performed. However, during the bull market, they have definitely given better returns than the frontline indices.

Annual Returns of Other MNC Funds and Market Returns

Looking at the strategy of the fund, past performance of the funds in the similar space and current geopolitical scenario, one can wait for a while, let the portfolio be built and then can take a limited exposure to the fund.