ICICI Prudential Launches Nifty200 Quality 30 Index Fund

ICICI Prudential Mutual Fund has introduced the Nifty200 Quality 30 Index Fund, designed to offer investors exposure to fundamentally strong companies through a rules-based passive investment approach.

ICICI Prudential Mutual Fund has launched a new investment offering—ICICI Prudential Nifty200 Quality 30 Index Fund. This open-ended index scheme aims to replicate the Nifty200 Quality 30 Index and is available for subscription during the NFO period from May 21 to June 4, 2025. The fund follows a passive investment strategy and offers exposure to 30 high-quality stocks selected from the broader Nifty 200 universe.

ICICI Prudential Mutual Fund announces the launch of the ICICI Prudential Nifty200 Quality 30 Index Fund, an open - ended index scheme replicating Nifty200 Quality 30 Index. This strategy is built on the ‘Quality’ factor, one of the foundational pillars of factor investing, which emphasises investing in financially sound businesses with strong fundamentals.

Factor investing in general targets key performance drivers such as quality, momentum, low volatility, value, and size to optimise returns while managing risk. This new Scheme aims to provide investors with access to a curated portfolio of 30 companies from the Nifty 200 universe that scores high on key quality parameters, including Return on Equity, a low Debt-to-Equity ratio, and stable earnings growth.

Abhijit Shah, Chief Marketing and Digital Business Officer at ICICI Prudential AMC, said: “Through this product, we aim to offer investors a scheme that brings together the core principles of quality investing—resilience, efficiency, and relative stability. This scheme is suitable for those looking to build long-term wealth using a transparent, rule-based approach that has historically performed well during market downturns.”

Focus on the ‘Quality’ Factor in Investing

This fund is rooted in the quality factor of investing, which prioritizes companies that display strong fundamentals such as high return on equity (ROE), low financial leverage, and consistent earnings growth. The quality factor is widely recognised as a key pillar in factor-based investing. ICICI Prudential’s new fund brings this principle into a rules-based, transparent portfolio.

Factor-Based and Rule-Driven Selection Process

The fund selects stocks based on a composite quality score derived from specific financial metrics. For non-financial companies, the score gives equal weight to ROE, the inverse of the debt-to-equity ratio, and earnings variability. For financial stocks, only ROE and earnings variability are considered. This approach ensures that only fundamentally strong companies with stable financials are included.

Market Resilience Backed by Historical Performance

The Nifty200 Quality 30 Index has demonstrated strength in navigating market volatility. It has outperformed broader indices during challenging phases such as the global sell-off in 2015–16, the COVID-19 crash in 2020, and the geopolitical stress caused by the Ukraine crisis between 2021 and 2022. This track record points to its defensive characteristics during market downturns.

Efficient Portfolio at a Lower Cost

As a passively managed index fund, the scheme offers a lower expense ratio compared to actively managed funds. It is designed to be a systematic investment plan (SIP), a systematic transfer plan (STP), and systematic withdrawal plan (SWP) ready. Investors can start with a minimum SIP amount of Rs 1,000 across daily, weekly, fortnightly, monthly, or quarterly frequencies.

Sectoral Diversification and Long-Term Potential

As of April 30, 2025, the index comprises companies from diverse sectors, including FMCG, IT, financial services, and industrials. This diversification adds to the fund’s appeal for long-term investors seeking exposure to a broad spectrum of high-quality businesses. Since its inception in April 2005, the index has delivered a compound annual growth rate (CAGR) of 18.0 per cent, compared to 14.5 per cent for both Nifty 50 and Nifty 200.

Investor Suitability and Management

This index fund is suitable for investors seeking long-term capital appreciation through disciplined, rules-based investing in quality companies. It is managed by experienced fund managers, Mr. Nishit Patel and Ms. Ashwini Shinde. The fund has no exit load, making it flexible for investors.

ICICI Prudential Nifty200 Quality 30 Index Fund offers an opportunity to invest in a portfolio of resilient and efficient companies through a transparent and structured approach. Given its focus on quality, it is positioned as a suitable option for investors seeking to build long-term wealth while mitigating downside risk during uncertain markets.

Disclaimer: The article is for informational purposes only and not investment advice.