ICICI Prudential CRISIL-IBX Financial Services 3-6 Months Debt Index Fund – Direct (G) : NFO Details

The ICICI Prudential CRISIL-IBX Financial Services 3-6 Months Debt Index Fund is an open-ended index fund that tracks the CRISIL-IBX Financial Services 3-6 Months Debt Index. It was introduced by ICICI Prudential Mutual Fund, one of the well-known fund houses in the nation.  The fund makes investments in banking sector securities with AAA ratings and maturities ranging from three to six months. 95% to 100% of the fund's assets are allocated to index-listed debt instruments. Treasury Bills, government securities (up to one year), and Tri-Party Repos are among the money market instruments in which the remaining 0-5% may be placed.

Details of the NFO: ICICI Prudential CRISIL-IBX Financial Services 3-6 Months Debt Index Fund – Direct (G)

Investment Objective & Strategy

Objective:

The investment objective of this scheme is to track the CRISIL-IBX Financial Services 3-6Months Debt Index, subject to tracking errors. However, there can be no assurance or guarantee that the investment objective of the Scheme will be achieved and the scheme does not assure or guarantee any returns.

Investment Strategy:

The Scheme is a Debt Index Scheme. The Scheme is passively managed which will employ an investment approach designed to track the performance of CRISIL-IBX Financial Services 3-6Months Debt Index subject to tracking errors. The Scheme shall follow a passive investment strategy.

The scheme follows perpetual structure, wherein the scheme would be rebalanced as per set frequency and remain in line with maturity profile. The portfolio of eligible securities invested by the Scheme is expected to have, in aggregate, fundamental characteristics such as modified duration, weighted average maturity, aggregate credit ratings, aggregate Yield-to-Maturity (YTM) etc. along with other liquidity parameters in line with CRISIL-IBX Financial Services 3-6Months Debt Index. The Issuer weight of the Scheme will be broadly in line with the Issuer weights in the Index subject to suitability and availability of securities.

What are the Risk Associated with this ICICI Prudential CRISIL-IBX Financial Services 3-6 Months Debt Index Fund – Direct (G)?

• Tracking Error Risk: As the fund aims to track the CRISIL-IBX Financial Services 3-6 Months Debt Index, there may be discrepancies in returns due to tracking errors.
• Credit Risk: The fund invests in banking sector securities with AAA ratings, but there is still a potential risk of credit downgrades, which could affect returns.
• Liquidity Risk: While the fund invests in money market instruments, the liquidity of these instruments may fluctuate, especially in stressed market conditions.
• Interest Rate Risk: As the fund primarily invests in short-duration debt instruments, rising interest rates could lead to a decrease in the value of the fund’s holdings.
• Market Risk: Despite being a debt fund, the performance is subject to market conditions, and factors such as economic downturns or regulatory changes can influence returns.
• Issuer-Specific Risk: The fund’s returns are dependent on the financial health of issuers in the financial services sector, particularly banks, which could be impacted by systemic issues.

What Type of Investor Should Invest in ICICI Prudential CRISIL-IBX Financial Services 3-6 Months Debt Index Fund – Direct (G)?

• Conservative Investors: Suitable for conservative investors looking for a low-risk, short-duration debt fund with exposure to high-quality financial sector instruments.
• Investors Seeking Short-Term Gains: Ideal for those with a short-term investment horizon (3-6 months) who are seeking stability with potential moderate returns.
• Risk-Averse Investors: Investors looking to avoid high market volatility but still wishing to gain exposure to the debt market with AAA-rated securities.
• Passive Investment Enthusiasts: Suitable for investors preferring a passive investment approach that tracks a specific index without active management.
• Investors Looking for Liquidity: Those who want relatively easy access to their investment with no entry or exit load fees.