ICICI Prudential Midcap 150 Index Fund NFO review: Should you invest?

#invest, #Mutual Funds, Nifty Midcap 150, midcap schemes, outperforming mid-cap fund, expense ratio, passively managed fund, ICICI Prudential Mutual Fund

Over the last 18 months many investors have taken to small and mid- cap stocks or schemes investing in them. ICICI Prudential Midcap 150 Index Fund is coming out with a fresh offering. Should you invest in the NFO (new fund offer)?

What is on offer?

ICICI Prudential Midcap 150 Index Fund (IM150) aims to generate return in line with returns generated by the Nifty Midcap 150 (NM150). The fund manager will buy the constituent stocks in NM150 in the same proportion as they are in the index. The new fund offer opened today – December 3, 2021.

What works

The midcap index is constructed taking into account free float market capitalisation of the stock. The index is rebalanced twice a year. Investments in this index gives exposure to some of the emerging companies which may become large-caps later. The investors get to participate in the high growth phase of some of the mid-cap companies.

NM150 TRI has given 19.15 percent return compared to 17.05 percent returns delivered by Nifty 50 TRI over the last five years.

Chintan Haria, Head-Product Development & Strategy, ICICI Prudential AMC said, “The scheme will invest in well-diversified Nifty Midcap index constituents spread across key industries. By investing in this Fund, investors can participate in the growth story of many of the midcap stocks that have the potential of becoming large caps.”

This being a passively managed scheme, investors do not get exposed to fund manager risk. “Though traditionally actively managed midcap schemes have delivered more returns over benchmark midcap indices, in the recent past, the number of schemes outperforming the benchmark has gone down, making us consider investing in mid-caps through index funds,” says Harshvardhan Roongta, Principal Financial Planner, Roongta Securities.

“Over the last few years, identifying consistently outperforming mid-cap funds has become a task, for which investors are paying relatively high expense ratios. A passively managed fund solves at least part of problem by bringing down the expenses,” says Jignesh Shah, founder of Mumbai-based Capital Advisors.

What doesn’t

In a liquidity driven bull market, all stocks do well and that makes many actively managed mutual fund schemes underperform their respective benchmarks. In a sideways market or a volatile market, the quality stocks picked by fund managers may do well. In such a case, actively managed schemes can beat their benchmarks, especially in the case of mid and small cap segment.

Though mid-caps tend to do well in the long term, they also exhibit higher volatility compared to their large cap counterpart. Standard deviation – a measure of volatility of the NM150 stands at 18.33 compared to 18.15 for Nifty 50. Higher the standard deviation higher the volatility.

After a liquidity driven rally, valuations are elevated for equity as an asset class. Nifty 50 index enjoys a price to earnings ratio of 23.43 compared to 29.5 for the NM150.

What should you do?

ICICI Prudential Mutual Fund has an exchange traded fund tracking this index – ICICI Prudential Nifty Midcap 150 Index. The fund house has been expanding its passive product portfolio for some time now. Fund houses such as Nippon India Life, Aditya Birla Sun life and Motilal Oswal offer index funds tracking NM250.

Such products work for long term investors looking for mid-cap exposure without fund manager risk. Investors have to keep an eye on the expense ratio of the scheme and tracking error. Investors are better off staggering their investments using systematic investment plans.

The NFO will close on December 17, 2021.

News Related

OTHER NEWS

Subscribe to Adani Wilmar: Arihant Capital

AGS Transact Technologies is going to raise Rs 680 crore through its public issue which is entirely an offer for sale by selling shareholders including promoter Arihant Capital IPO report ... Read more »

Explained | Hindu daughters can inherit father's property even if he doesn't leave behind a will 

The Supreme Court on January 21 made it clear that Hindu daughters would be entitled to inherit the property of their father in the absence of any other legal heir; they ... Read more »

Lux Industries locked in 20% lower circuit after executive director is banned for insider trading

The share price of Lux Industries Ltd hit a 20 percent lower circuit after its executive director was banned for insider trading, raising concerns over corporate governance at the company. The stock ... Read more »

Surging inflation pushes cost of servicing govt debt to December record of £8.1bn

Interest payments on government debt hit a record £8.1bn for the month of December because of surging inflation, according to official figures. The Office for National Statistics (ONS) said the ... Read more »

Attention for Unilever and PostNL on Damrak

Photo: ANP Food and care group Unilever and postal and parcel delivery company PostNL are the eye-catchers at Beursplein 5 on Tuesday. Unilever is said to want to cut thousands ... Read more »

Why EPFR's Brandt thinks China is a safe bet while investors will likely be cautious on India this quarter

Cameron Brandt, director of research at EPFR, an Informa Financial Intelligence business, is known for his ability to spot trends in leveraged bear bonds and emerging markets among others. In ... Read more »

Chinese fashion retailer SHEIN revives plan for New York listing in 2022: Report

Image: Reuters Chinese fashion retailer SHEIN is reviving plans to list in New York this year and its founder is considering a citizenship change to bypass proposed tougher rules for ... Read more »

Move 25-30% of your money in quality; wait-and-watch on new-age stocks: Gurmeet Chadha

The ongoing market selloff has rattled investors in new-age listed companies. Some of the recent IPOs have even sunk below their listing prices, falling as much as 50% from highs. ... Read more »

Transport bottlenecks affect parcel delivery PostNL in 2021 lock

Photo: ANP PostNL delivered fewer parcels in the last three months of last year than a year earlier. According to the parcel and postal deliverer, this is due to the ... Read more »

PostNL delivers fewer parcels

PostNL transported 5.3 percent fewer parcels in the fourth quarter than a year earlier, the company estimates in its preliminary results. If there had not been a one-off effect of ... Read more »

Low-cost smartphone based test can accurately detect COVID-19 in 20 minutes

Researchers in the US have developed a low-cost smartphone based diagnostic tool for COVID-19 that combines the speed of over-the-counter antigen tests with the accuracy of PCR tests. The Harmony ... Read more »

Losses in Asia stocks by Ukraine and impending Fed decision

Photo: ANP Stock markets in Asia closed the trade with heavy losses on Tuesday. Investors are cautious in anticipation of the results of the meeting of the US central bank ... Read more »

Fresh food is going off the menu for airlines as ready-to-eat becomes the new norm

Food served on board the economy class of an airplane (Representative Image: Shutterstock) The Indian palate is hard to please and more so up in the air where the senses ... Read more »

Manyavar-owner Vedant Fashions IPO to open on February 4

Representative image The initial public offering (IPO) of Vedant Fashions Ltd, which owns ethnic wear brand Manyavar, will open on February 4. The initial share sale will conclude on February ... Read more »

Indian economy has recovered 'handsomely' from pandemic-induced disruptions: Arvind Panagariya

File image: Arvind Panagariya The Indian economy has recovered ‘handsomely’ from the pandemic-induced disruptions, former NITI Aayog Vice Chairman Arvind Panagariya said on Tuesday, while expressing hope that the recovery will ... Read more »

South Korea's beer imports record an all-time low

Photo by: engin akyurt/Unsplash South Korea’s imports of beer have plummeted, and it was said that last year’s record was at an all-time low in five years. Based on the ... Read more »

BPCL gains 2% after winning bid for city gas distribution networks

Bharat Petroleum Corporation Ltd (BPCL) share price gained two percent to Rs 380.35 after the company won the bid for city gas distribution networks in a round conducted by Petroleum and Natural Gas ... Read more »

With high inflation and low interest rates, the US Federal Reserve is playing with fire

The US Federal Reserve has turned on a dime, an uncharacteristic about-face for an institution long noted for slow and deliberate shifts in monetary policy. It has recognised that it ... Read more »

Moneycontrol PRO & Espresso present Nifty Banker 2.0 on Tuesday, 25th January, at 8 pm, with Kapil Dhama on “The Art of Option Adjustments in famous Iron Fly”

Moneycontrol PRO & Espresso present Nifty Banker 2.0 with Kapil Dhama on “The Art of Option Adjustments in famous Iron Fly” Nifty Banker 2.0 is India’s First Retail Index Traders ... Read more »

With high FD rates from Bajaj Finance, get the benefit of growth and secured returns

On Monday, the Indian market tanked, reflecting the dynamic nature of market-linked investments. Today, you can invest in mutual funds, equity, gold, and stocks. These instruments promise high returns, but they ... Read more »

PMT pension fund is not yet leaving the fossil fuel industry

Photo: ANP Pensioenfonds Metaal en Techniek (PMT) is still not withdrawing its investments from companies active in the fossil fuel industry, as other funds have already announced. It is better ... Read more »

Kinetic Green Energy partners with Aima Tech to develop electric two-wheelers

Image: Shutterstock Pune-headquartered Kinetic Green Energy & Power Solutions has teamed up with China-based electric vehicle giant Aima Technology Group to co-design and develop electric two-wheelers for the rapidly growing ... Read more »

Renault, Nissan, Mitsubishi to jointly develop EVs, plans to be revealed this week

Photo by: Sébastien Chiron/Unsplash Renault, Nissan Motor, and Mitsubishi Motors Corp. have banded together to jointly develop electric vehicles. The three companies are said to be planning to increase their ... Read more »

Understanding the Most Important Part of Firm

Human Resource Management (HRM) is primarily concerned with acquiring, encouraging, and keeping the best people to successfully and efficiently implement the organization’s strategic goal. It’s not just about finding and ... Read more »

Cryptocurrency: Bank of Korea completes first phase of digital currency mock test

Photo by: Michael Förtsch/Unsplash The Bank of Korea revealed on Monday, Jan. 24, that it has completed the first phase of the mock test of the workability of the central ... Read more »

Indonesia regulator says financial firms banned from facilitating crypto sales

A representation of cryptocurrencies in this illustration taken on Jan 24, 2022. (Reuters photo) JAKARTA: Indonesia's Financial Services Authority (OJK) on Tuesday warned that financial firms are not allowed to ... Read more »

SBI Cards share price edges higher after a robust Q3, Motilal Oswal expects 32% upside

SBI Cards and Payment Services’ share price was up more than 3 percent at Rs 841.50 on BSE in the morning trade on January 25, a day after the company ... Read more »

Crypto winter sees $700-billion dent in market capital since start of 2022

The year 2022 seems to have had a lukewarm start for for cryptocurrencies, with regular value erosions, and markets plummeting in the red every other day. Data from CoinGecko suggests ... Read more »

Sudarshan Chem Consolidated December 2021 Net Sales at Rs 601.76 crore, up 18.84% Y-o-Y

Reported Consolidated quarterly numbers for Sudarshan Chemical Industries are: Net Sales at Rs 601.76 crore in December 2021 up 18.84% from Rs. 506.38 crore in December 2020. Quarterly Net Profit ... Read more »

Shemaroo Ent Standalone December 2021 Net Sales at Rs 85.93 crore, down 1.3% Y-o-Y

Reported Standalone quarterly numbers for Shemaroo Entertainment are: Net Sales at Rs 85.93 crore in December 2021 down 1.3% from Rs. 87.06 crore in December 2020. Quarterly Net Profit at ... Read more »

Bigbloc Constru Standalone December 2021 Net Sales at Rs 31.78 crore, up 49.6% Y-o-Y

Reported Standalone quarterly numbers for Bigbloc Construction are: Net Sales at Rs 31.78 crore in December 2021 up 49.6% from Rs. 21.24 crore in December 2020. Quarterly Net Profit at ... Read more »

Bigbloc Constru Consolidated December 2021 Net Sales at Rs 52.75 crore, up 52.22% Y-o-Y

Reported Consolidated quarterly numbers for Bigbloc Construction are: Net Sales at Rs 52.75 crore in December 2021 up 52.22% from Rs. 34.65 crore in December 2020. Quarterly Net Profit at ... Read more »

Oriental Hotels Standalone December 2021 Net Sales at Rs 76.01 crore, up 76.85% Y-o-Y

Reported Standalone quarterly numbers for Oriental Hotels are: Net Sales at Rs 76.01 crore in December 2021 up 76.85% from Rs. 42.98 crore in December 2020. Quarterly Net Profit at ... Read more »

Jay BharatMarut Consolidated December 2021 Net Sales at Rs 505.72 crore, up 1.95% Y-o-Y

Reported Consolidated quarterly numbers for Jay Bharat Maruti are: Net Sales at Rs 505.72 crore in December 2021 up 1.95% from Rs. 496.03 crore in December 2020. Quarterly Net Profit ... Read more »

Sudarshan Chem Standalone December 2021 Net Sales at Rs 539.97 crore, up 16.98% Y-o-Y

Reported Standalone quarterly numbers for Sudarshan Chemical Industries are: Net Sales at Rs 539.97 crore in December 2021 up 16.98% from Rs. 461.58 crore in December 2020. Quarterly Net Profit ... Read more »

Shiva Cement Standalone December 2021 Net Sales at Rs 0.03 crore, down 99.55% Y-o-Y

Reported Standalone quarterly numbers for Shiva Cement are: Net Sales at Rs 0.03 crore in December 2021 down 99.55% from Rs. 7.01 crore in December 2020. Quarterly Net Loss at ... Read more »

Oriental Hotels Consolidated December 2021 Net Sales at Rs 76.30 crore, up 77.36% Y-o-Y

Reported Consolidated quarterly numbers for Oriental Hotels are: Net Sales at Rs 76.30 crore in December 2021 up 77.36% from Rs. 43.02 crore in December 2020. Quarterly Net Profit at ... Read more »

Craftsman Consolidated December 2021 Net Sales at Rs 554.15 crore, up 13.31% Y-o-Y

Reported Consolidated quarterly numbers for Craftsman Automation are: Net Sales at Rs 554.15 crore in December 2021 up 13.31% from Rs. 489.07 crore in December 2020. Quarterly Net Profit at ... Read more »

Shemaroo Ent Consolidated December 2021 Net Sales at Rs 89.91 crore, up 2.15% Y-o-Y

Reported Consolidated quarterly numbers for Shemaroo Entertainment are: Net Sales at Rs 89.91 crore in December 2021 up 2.15% from Rs. 88.02 crore in December 2020. Quarterly Net Profit at ... Read more »

Kirloskar Ferro Standalone December 2021 Net Sales at Rs 933.20 crore, up 58.14% Y-o-Y

Reported Standalone quarterly numbers for Kirloskar Ferrous Industries are: Net Sales at Rs 933.20 crore in December 2021 up 58.14% from Rs. 590.10 crore in December 2020. Quarterly Net Profit ... Read more »
On free-english-test.com you will find lots of free English exam practice materials to help you improve your English skills: grammar, listening, reading, writing, ielts, toeic