ICICI Prudential Mutual Fund on October 6, 2022 announced the launch of the ICICI Prudential Transportation and Logistics Fund. The open-ended equity scheme will follow the transportation and logistics theme. The new fund offer opens on October 6, 2022 and will close on October 20, 2022, the mutual fund house announced in a press statement.
It said the scheme will predominantly invest in equity and equity-related securities of companies engaged in the transportation and logistics theme. It will also invest in sectors and/or stocks that form a part of Nifty Transportation and Logistics TRI which is also the benchmark of the offering. The scheme will invest about 80 per cent in companies forming a part of transportation and logistics theme and up to 20 per cent in other equity/equity related instruments.
It said as the scheme will follow a buy and hold approach, hence an investment horizon of minimum five years is recommended.
Investments can be made in both the regular and direct plans, and in either growth or dividend options. The minimum investment will be Rs. 5,000 and in multiples of Re. 1. The minimum additional application amount will be Rs. 1,000 and in multiples of Re. 1. There is no entry load, but the exit load will be 1 per cent of the applicable net asset value (NAV) if redeemed in less than one month.
ICICI Prudential Mutual Fund said that as a theme, transportation and logistics are considered an engine of economic growth, and they are expected to do well in the near future.
ICICI Prudential Mutual Fund said there were many positive sides to investing in the transportation sector. There is a strong distribution network in place. It has a positive co-relation to the GDP, and there is also the aspect of net cash balance sheets negative capital working cycle for the players. This also makes the core return ratios strong.
Chintan Haria, head – product development and strategy, ICICI Prudential AMC says: “Transportation is an under-penetrated market in India. The new policy on logistics by the government underlines the key role played by the sector in the economic growth of the country. Formalisation of the economy and positive correlation to GDP growth and the government’s initiatives to reduce costs and improve efficiency, all stand to benefit the sector in the coming years. With muted performance in the last couple of years, we believe the theme is coming out of the woods and there are more legs to recovery.”
He adds: “Coming to logistics, formalisation of economy i.e., shift from unorganised to organised sector aids in the growth of logistics space. India’s logistics market is estimated at $216 billion, out of which organised players contributed only about 3.5 per cent ($6-7 Billion) in FY 2020. We expect disruption in this segment and market share shift from unorganised to organised players, as Indian e-commerce shipments growth plays out. Going forward, government initiatives may lead to cost reduction and increase efficiency.”