New Delhi: ICICI Prudential Mutual Fund on Tuesday is all set to launch a PSU Equity Fund, an open-ended equity scheme that will primarily invest in equity and equity-related instruments of public sector units. The scheme can invest in sectors or stocks that are part of the S&P BSE PSU Index.
The New Fund Offer (NFO) of ICICI Prudential PSU Equity Fund will open on 23 August and close on 6 September.
The scheme can invest in opportunities by market capitalization i.e. large, mid or small cap. With a minimum of 80% in PSU shares, the scheme can invest up to 20% in other equity and equity related securities.
According to the fund house, the scheme is suitable for investors who are looking for opportunities to participate in the potential growth story of PSUs, as they are attractively placed based on valuations and offer better dividends than the broader markets. produce also.
Speaking at the launch, Chintan Hariya, Head – Product Development & Strategy, ICICI Prudential AMC said, “PSU companies are an important component of the capital market and are present in various sectors offering wide investment opportunities. In addition, PSUs are attractively placed on valuation basis and offer better margin of safety. In a volatile environment, companies offering high dividend returns are in high demand resulting in increased capital.”
The average dividend yield of the S&P BSE PSU Index over the last 17 years is 2.6 while that of the S&P BSE Sensex is 1.3.
Mittul Kalavadia and Anand Sharma will be the fund managers of the scheme.
According to the fund house, historically, before elections, public sector undertakings have performed well on the optimism around reforms.
“Given the pre-poll period, PSUs may perform well in the next 2 years. Apart from these, investing in PSU stocks offers a host of benefits. Lower cost of borrowing due to inherent sovereign comfort due to better credit rating/standing. It is beneficial during rising interest rate scenario. In addition, the PSU shares have relatively less key managerial personnel exposure from a sustainability perspective as compared to a promoter-run company. ICICI Prudential Mutual Fund said that PSU companies take less risk of diversification into unrelated businesses and they also pay higher dividends.
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