ICICI Pru Active Momentum Fund NFO: Should You Invest?

The ICICI Pru Active Momentum Fund is an open-ended equity scheme that follows a momentum investment strategy. It aims to generate long-term capital appreciation by investing primarily in equity and equity-related instruments of companies that exhibit strong price momentum and positive earnings revisions. The scheme applies filters based on risk, governance, and other factors to select stocks with favourable price trends and strong fundamentals. Managed by ICICI Prudential Mutual Fund, this NFO is ideal for investors looking to tap into momentum-driven opportunities while maintaining reasonable diversification across sectors. However, as an equity thematic scheme, it carries a very high-risk profile and is suitable for investors with a long-term investment horizon and a higher risk appetite.

Key Features of ICICI Pru Active Momentum Fund

• Opening Date: July 8, 2025
• Closing Date: July 22, 2025
• Exit Load: 1% if redeemed or switched out within 12 months from allotment. NIL if redeemed or switched out after 12 months
• Fund Manager: Ms. Manasvi Shah, Ms.  Sharmila  D'mello

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Objective of ICICI Pru Active Momentum Fund

The objective of the ICICI Pru Active Momentum Fund - Direct (G) is to achieve long-term capital growth by investing in equities and equity-related instruments of companies that demonstrate strong momentum factors. However, there is no guarantee or assurance that the investment objective will be achieved.

Investment Strategy of ICICI Pru Active Momentum Fund

• The scheme follows an active momentum investment approach.
• It focuses on companies with favourable price trends across different periods.
• Proprietary momentum models are used to select stocks based on price and earnings momentum.
• Filters based on risk, governance, and fundamentals help narrow the stock universe.
• The scheme may invest up to 35% in overseas equities, ADRs, GDRs, bonds, and mutual funds.
• It may also invest in debt, money market instruments, REITs, InvITs, and derivatives for hedging and portfolio balancing.
• Portfolio reviews will be conducted periodically with changes made as required.

Risks Associated with ICICI Pru Active Momentum Fund

• High volatility risk due to equity market fluctuations.
• Market risk arises from political and economic developments.
• Settlement risk that may affect the timely purchase or sale of securities.
• Concentration risk if investments are focused on specific sectors or themes.
• Portfolio volatility may increase during market downturns.
• Liquidity risks in debt and money market instruments.
• Credit and default risks associated with fixed income securities.
• Interest rate fluctuations are impacting debt valuations.
• Currency risks in overseas investments.
• Derivatives usage introduces additional complexities and risks.

Risk Mitigation Strategy by ICICI Pru Active Momentum Fund

• The NFO applies a structured risk management approach to reduce portfolio risks. For equities, diversification across sectors and companies is maintained to limit concentration risk. 
• The stock selection process incorporates risk and governance filters. In debt investments, only rated instruments are considered, with a focus on issuers with sound fundamentals and strong credit profiles. 
• The scheme uses in-house credit evaluation for debt instruments. Exposure to derivatives is closely monitored and used mainly for hedging and portfolio balancing. 
• Overseas investments are capped at 35% to control external risks. The portfolio is regularly reviewed and rebalanced to adapt to market conditions and reduce overall risk exposure.

What Type of Investor Should Invest in ICICI Pru Active Momentum Fund?

• Investors with a long-term investment horizon.
• Those seeking capital appreciation through equity investments.
• Individuals are comfortable with a very high-risk equity thematic fund.
• Investors are looking to capitalise on market momentum opportunities.
• Those who understand the cyclical nature of momentum investing.
• Investors are willing to accept short-term volatility for potential long-term gains.