ICICI Prudential and Union MF unveil new fund offers targeting diverse investments

ICICI Prudential Mutual Fund and Union Mutual Fund have launched two new investment schemes, aiming to provide retail investors with diverse and strategic options. The ICICI Prudential Nifty200 Quality 30 Index Fund and the Union Income Plus Arbitrage Active Fund of Fund (FOF) are designed to cater to different market conditions and investor preferences, each bringing distinct features to the table.

The ICICI Prudential Nifty200 Quality 30 Index Fund, open until 4 June 2025, is an open-ended index scheme that tracks the Nifty200 Quality 30 Index. This passively managed fund adheres to a rule-based investment strategy, offering exposure to 30 high-quality companies from the Nifty 200 universe. Companies are chosen based on key financial metrics such as return on equity, low financial leverage, and stable earnings growth, indicative of strong business fundamentals and efficient capital allocation. Abhijit Shah, Chief Marketing and Digital Business Officer at ICICI Prudential AMC, emphasises the scheme's focus on "resilience, efficiency, and relative stability," catering to investors seeking long-term wealth through a transparent approach that has historically performed well in downturns.

The Nifty200 Quality 30 Index has demonstrated substantial resilience, particularly during periods of market volatility such as the 2015-16 global sell-off and the COVID-19 pandemic. With an 18.0% compound annual growth rate since 2005, it has outperformed broader indices like the Nifty 50 and Nifty 200. Fund managers Nishit Patel and Ashwini Shinde oversee the scheme, which offers benefits like transparency, cost efficiency, and downside protection.

Meanwhile, Union Mutual Fund's new offering, the Union Income Plus Arbitrage Active FOF, is available for subscription until 5 June 2025. This open-ended scheme seeks to create a blend of income generation and tax efficiency by investing in units of arbitrage and debt-oriented mutual fund schemes. The fund aims to deliver medium- to long-term income through dynamic allocation between arbitrage and debt fund components, with a capability to invest up to 65% of its assets in either strategy based on market conditions.

The Union Income Plus Arbitrage Active Fund stands out for its tax-efficient income solution. If held for over 24 months, it may qualify for equity-like long-term capital gains taxation at 12.5%, inclusive of surcharge but exclusive of cess. This feature is particularly appealing in a declining interest rate environment. The fund is professionally managed by Vishal Thakker for arbitrage and Anindya Sarkar and Shrenuj Parekh for debt components, emphasising a diversified income strategy combined with simplified portfolio access.

Union Mutual Fund's broader strategy focuses on providing investor-centric solutions, as evidenced by recent launches like the Union Multi Asset Allocation Fund in August 2024 and Union Gold ETF-based offerings. The new scheme is positioned as a potential alternative to traditional debt funds, offering a low-cost opportunity for retail investors to benefit from the long-term growth potential of quality companies, providing superior risk-adjusted returns across market cycles.

Both funds offer various investment options, including Systematic Investment Plans (SIPs), Systematic Transfer Plans (STPs), and Systematic Withdrawal Plans (SWPs), catering to the different needs of retail investors. The ICICI Prudential fund, with a minimum SIP amount of ₹1,000, offers no exit load, enhancing its appeal for investors looking for flexibility and cost efficiency. Similarly, the Union Income Plus Arbitrage Active FOF provides a streamlined investment experience with a single net asset value (NAV).

Considering the competitive landscape, these launches add diversity to the Indian investment market, responding to varying investor appetites for risk and returns. By tapping into both quality indexing and arbitrage opportunities, ICICI Prudential and Union Mutual Fund position themselves strategically against competitors such as HDFC Mutual Fund and SBI Mutual Fund, known for their extensive market reach and innovative product offerings.

As investors continue to navigate market uncertainties and look for stable investment avenues, these new fund offers by ICICI Prudential and Union Mutual Fund present promising options that align with modern investment philosophies, focusing on quality, tax efficiency, and strategic allocation. The emphasis on providing long-term value through carefully curated portfolios could enhance investor confidence in these offerings.