A New Mutual fund is being launched, should you invest?

Let us 1st learn and then decide:

Q. What is the Fund name?

ICICI Prudential MNC fund

Q. What does the name MNC imply?

MNC stands for Multi-National Companies, as the name suggests this fund will invest only in Indian and global MNC’s

Please give some examples of MNC companies?

1. Colgate
2. Nestle
3. Britannia 
4. TATA Motors 

They might also be investing in companies that do business in India, however, are not listed on the Indian Stock Exchange, Resident Indians cannot buy these stocks directly.

1. Apple
2. Samsung
3. Google
4. Pfizer

Q Why should I invest in MNC funds?

There are plenty of reason

• Well Established companies 
• Global Market exposure and experience
• No Country specific risk
• Good Quality Products
• Technologically stronger than local companies
• Management has a great mix of Global Citizens

Having a worldwide presence, these companies focus and ensure very high standards of corporate governance. 

Most of them are cash-rich hence liabilities is not a major concern. This might result in better returns on equity and consistent dividend payout.  

Q. What is the Investment objective of ICICI MNC fund?

The primary objective of the scheme is to generate long term capital appreciation by investing predominantly in equity and equity related securities within MNC space.

Q. What type of Scheme is it?

MNC fund is an open-ended equity fund

Q. What is open-ended fund?

Open-ended funds do not have any specific end date, ie. after the new fund offer date is closed they will start accepting money regularly. 

Investors can invest and redeem money without any hassle, however if redeemed before 365 days, there will be an exit load of 1% applicable.

Plus on any gain, you will have a short term capital gain (Tax 15%)

Q. Who are the fund managers?

1. Anish Tawakley since May 2019
2. Lalit Kumar since May 2019

Q. How to Invest?

Contact your Investment Advisor or your Internet banking should have an option to invest online

Q. How much to invest?

Minimum Investment is INR 5000, maximum is your choice. You can make a One-time investment or do SIP (recommended)

Q. Do we have similar funds?

Yes, few funds from different fund houses are listed below:

*Ratios: 

NAME	TOTAL EXPENSE RATIO	STANDARD DEVIATION	ALPHA	BETA	SHARPE RATIO
Aditya Birla SL MNC Fund	1.97 %	11.66	-7.96	0.63	-0.23
UTI MNC Fund-Reg	2.43 %	11.09	-12.30	0.64	-0.63

If you want to learn how to interpret this data, please read my earlier post "Are you a Mutual Fund Investor?" (👈Link)

*Returns:

NAME	6 month	1 yr	3 yr	5 yr	10 yr
Aditya Birla SL MNC Fund	6.18	1.73	9.26	17.81	21.25
UTI MNC Fund-Reg	-0.16	-2.34	9.61	15.15	18.92

Returns greater than 1 year have been annualized. *Source: https://www.rupeevest.com

Q. When does the Issue Open and close?

May 28, 2019 to Jun 11, 2019. Subsequently, this fund will be available like any other mutual fund.

Q. What are the advantage of MNC funds?

• Individuals can gain exposure to well-established companies that has a proven business model that has been tested in several countries.

• These companies have weathered the competition in many markets globally and have gained from the experience. 

• Most MNC companies offer goods and services of high quality and their products are technologically superior as they have access to the primary know-how.

• They enjoy a good brand image. 

• Many of them are led by expats, who have worked in several countries and bring a lot of experience to the job. 

• MNCs generally adhere to high standards of corporate governance 

Q. What are the disadvantage of MNC fund?

• A key handicap that managers of MNC funds have to deal with is the limited universe of stocks available to them.

• Most of the stocks are trading at a very high valuation, hence SIP is very strongly recommended

• The diversified equity funds in your portfolio may already have many of these stocks 

What should you do?

MNC fund might not be a good bet during the high growth period, however, it works wonderfully during a volatile and depressed market.

The Indian stock market is trading at an all-time high price-to-earnings ratio (PE ratio). It is advisable to invest in fundamentally strong companies.

Fortunately, this fund offers, some very strong companies in our portfolio.

If you plan to invest, do not have an exposure of more than 10 -15%

PLEASE NOTE:

ONLY INVEST THE AMOUNT, THAT YOU DO NOT NEED AT LEAST FOR 3-5 YEARS!!

Dear Readers,

This blog is my personal attempt to help you.  If you found this article to be helpful, kindly share it with your near and dear ones.

I would be very glad to hear your feedback, in fact, it will motivate me to continue my journey of , blog and teach.

Thanks and I wish and hope you make a lot of wealth from your investments.

All the best!! 👍👍👍

Cheers 🍹

Intelligent Investor