ICICI Mutual Fund partners with US company First Trust

ICICI Prudential Asset Management Company is partnering with US-based First Trust, a leading global manager of exchange-traded funds and mutual funds, in what would be India’s first overseas venture in the asset management sector. mutual funds since the outbreak of the Covid pandemic two years ago.

The arrangement will allow Indian individual investors to invest in offshore funds through the ICICI Prudential Mutual Fund feeder fund.

India’s largest fund house manages around Rs 4.7 lakh crore ($63.71 billion) of assets in the local market. First Trust is an international provider of enhanced indices and actively managed ETFs. It also manages approximately $147 billion in assets.

“This partnership brings together two investment managers who can leverage their strengths in investment expertise to deliver the best value to their respective investors,” said Shamit Chokshi, Head of International Business at ICICI Prudential AMC.

“Through this combination, we aim to provide Indian investors with many innovative active and publicly traded offerings from First Trust, as part of our plan to offer multiple portfolios focused on international and thematic investing,” it said. -he declares.

The launch of ICICI Prudential Strategic Metal & Energy Fund of Fund is a good example. The plan would invest in the First Trust Strategic Metal and Energy Equity UCITS Fund. The First Trust fund seeks to provide long-term capital appreciation by investing in a diversified portfolio of global equity securities related to gold and oil.

These securities will be listed or traded on regulated markets worldwide.

The strategy is touted as an effective hedge against potential declines in the Indian rupee and the economy when oil and gold prices rise.

A fund manager will consider correlation and momentum factors to allocate funds between stocks in the two sectors within a range of 30% to 70%.

For gold stocks, this will limit the fund to companies that are traded and incorporated primarily in G7 countries. The oil portfolio will probably remain mostly made up of American and Canadian companies.

“The goal of the gold and oil portfolios is to strive for broad representation of oil and gold producing companies,” Chokshi said.

The partnership will allow Indian investors to diversify their portfolios, according to Eric Anderson, senior vice president and head of international business at First Trust Advisors. “We look forward to partnering up and launching more such innovative fund strategies in India in the near future,” he said.

Investing in ETFs is generally passive as a fund manager tracks an index to generate returns on investments.

Passive ETFs attempt to replicate the performance of a predefined index, net of fees and expenses. But active ETFs aim to beat the benchmark they track, actively managing the portfolio by picking stocks, deciding index weightings and taking sector calls. In the United States, they are also tax efficient.

Passive ETFs would buy and hold according to the particular tracking index. Active ETFs would pursue a specific strategy to outperform a benchmark, but may be less transparent for passive ETFs, although there is portfolio information.

Dolores W. Simon