ICICI Prudential Files Nifty Private Bank Index Fund with SEBI

ICICI Prudential Mutual Fund has announced the launch of its Nifty Private Bank Index Fund, an open-ended index scheme tailored to replicate the Nifty Private Bank TRI. This fund offering is crafted for investors seeking long-term wealth creation by passively investing in India’s leading private-sector banks.

Objective of the Scheme

The fund’s investment objective is to provide returns that closely correspond to the total returns of the Nifty Private Bank Index, subject to tracking error. It aims to mirror the index by investing in the same constituents and in similar proportions.

Benchmark

The scheme will track the Nifty Private Bank Total Return Index (TRI) as its benchmark. This index is designed to reflect the performance of major private sector banks in India and is considered appropriate for performance comparison.

Category and Type of Scheme

The fund is classified as an “Other Scheme – Index Fund” under SEBI’s mutual fund categorisation. It is an open-ended scheme, meaning units can be bought or redeemed on any business day.

Asset Allocation

The scheme’s asset allocation is as follows:

• 95–100% in equity and equity-related securities of companies forming part of the Nifty Private Bank Index.
  
• 0–5% in money market instruments, including TREPs and debt mutual funds, primarily for liquidity management.

The scheme may also engage in stock lending, up to 20% of its net assets, in line with SEBI regulations.

Investment Strategy

ICICI Prudential Nifty Private Bank Index Fund follows a passive investment strategy, seeking to replicate the benchmark index rather than actively selecting stocks. Key highlights of the strategy include:

• Investing in all index constituents in the same weight as the index.
  
• Rebalancing the portfolio within 7 calendar days in the event of index changes.
  
• Maintaining tracking error within the regulatory limit of 2%.

Where Will the Scheme Invest?

The fund will primarily invest in:

• Equity shares of companies included in the Nifty Private Bank Index.
  
• Equity derivatives (for short-term liquidity or rebalancing purposes).
  
• TREPs and money market instruments to meet liquidity needs.

Fund Managers

The scheme will be jointly managed by:

• Mr. Nishit Patel – Chartered Accountant and CFA (Level 1), associated with ICICI Prudential since 2018, with extensive experience managing various passive and index-based products.

• Ms. Ashwini Shinde – M.Com and Inter CA, with years of experience at ICICI Prudential AMC across treasury operations and now managing passive schemes.

Plans and Options

The fund offers 2 plans:

• Regular Plan
  
• Direct Plan
  

Each plan provides the following options:

• Growth Option (Default)
  
• Income Distribution cum Capital Withdrawal (IDCW) with Payout and Reinvestment sub-options.

Load Structure

• Exit Load: Nil
  Investors can exit the scheme without incurring any charges.

Minimum Investment Amounts

• Initial purchase: ₹1,000 and in multiples of ₹1.
  
• Additional purchase: ₹1,000 and in multiples of ₹1.
  
• Minimum switch-in amount: ₹1,000.
  
• Minimum redemption: Any amount.

Expense Ratio

The Total Expense Ratio (TER) is capped at 1.00% of the daily net assets. An additional 0.30% may be charged for retail inflows from specified B30 cities, subject to SEBI guidelines.

The direct plan will have a lower expense ratio as it excludes distributor commissions.

Special Facilities

The scheme supports Systematic Investment Plan (SIP), Systematic Transfer Plan (STP), and Systematic Withdrawal Plan (SWP), offering flexibility in investing and withdrawing funds.

Conclusion 

The ICICI Prudential Nifty Private Bank Index Fund provides investors with an opportunity to invest passively in the growth and evolution of India’s private banking sector. By mirroring the Nifty Private Bank Index, the scheme seeks to deliver index-like returns with a disciplined, low-cost strategy.

Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. This does not constitute a personal recommendation/investment advice. It does not aim to influence any individual or entity to make investment decisions. Recipients should conduct their own research and assessments to form an independent opinion about investment decisions. 

Mutual Fund investments in the securities market are subject to market risks, read all the related documents carefully before investing.