ICICI Prudential Mutual Fund announced the launch of the ICICI Prudential Innovation Fund, an open-ended thematic equity fund that will primarily invest in equity, equity related securities of companies and units of global mutual funds that can benefit from innovation strategies and themes. NFO opened from 10 April 2023 and closes on 24 April 2023.
The scheme will take a bottom up approach and exposure for companies that have developed products or services related to solutions can be provided. The strategy may make investments in accordance with the market cap, based on appropriate opportunities. Anish Tawakley and Vaibhav Dusad will be fund manager for the scheme. Sharmila D.Mello is responsible for managing overseas investments. Nifty 500 TRI represents a benchmark of the scheme.
The scheme will invest min 80% in companies adopting innovation strategies and themes and overseas securities adopting innovation strategies and themes. The scheme may invest up to 20% of it’s net assets in ADR \ GDR \ Foreign securities \ Mutual Funds \ ETF’s. The scheme may invest across market-cap basis suitable opportunities.
According to the fund house, it has long been established that innovation companies tend to perform better than their competitors when they succeed in organic growth by way of innovation which gives them greater opportunities for wealth creation. Given the rapid pace with which innovation diffusion occurs, this is particularly important.
Innovation can be found across different sectors like Auto, Auto ancillaries, Pharma & healthcare, Telecom, Financial services, Technology services, Power, Specialty/ Agro chemicals, Industrials automaton etc.
Types of innovation
1) Radical Innovation – Replace an existing product with a brand new one. Example Camera to Smartphone for clicking picture.
2) Disruptive Innovation – New affordable products & services catering to large customer base. Example washing machine, refrigerator etc.
3) Incremental Innovation – Upgrades to existing products \ services \ process for example old TV box to LCD TV, LCD TV to LED TV. 2G TO 3G, 3G TO 4G, 4G TO 5G
Summary-
• Innovation pace has picked-up in the last decade
• Innovation is a theme which can occur across sector \ theme \ companies and market cap
• India has a robust ecosystem in place for nurturing innovation
• As countries look to become increasingly self-sufficient in term of resources, the theme may do well going forward globally as well as domestically.
• The AMC will take necessary steps for identifying potential trends in various sectors/ themes.
*Mutual fund investments are subject to market risks, read all scheme related documents carefully.