ICICI Prudential Rural Opportunities Fund NFO: Should you invest?

The ICICI Prudential Rural Opportunities Fund NFO (new fund offer) opened for subscription on January 9, 2025, and will be available for public subscription until January 23, 2025.

ICICI Prudential Rural Opportunities Fund: What is it?

The ICICI Prudential Rural Opportunities Fund is a thematic equity mutual fund that focuses on investing in companies connected to the rural economy. This means it aims to identify and invest in businesses that directly benefit from or cater to rural and allied sectors, such as agriculture, rural infrastructure, rural consumption and related industries.

ICICI Prudential Rural Opportunities Fund NFO: How will the fund's performance be measured?

This new fund will be benchmarked against Nifty Rural TRI.

Nifty Rural TRI: What is it?

The Nifty Rural TRI index, as the name implies, comprises 75 companies that are actively involved in or closely linked to rural and allied sectors.

Financial services (24.2 per cent), FMCG (21.5 per cent) and Auto (17.4 per cent) are the three most prominent sectors in the index, making up more than three-fifths of the index.

Some major companies in this index are ITC , Bharti Airtel and SBI (State Bank of India).

ICICI Prudential Rural Opportunities Fund NFO: Investment strategy

As per the fund's mandate, at least 80 per cent of the portfolio will be invested in stocks linked to the rural theme. It is actively managed, meaning the fund managers will select stocks they believe will perform well within this theme.

ICICI Prudential Rural Opportunities Fund NFO: Performance outlook

While there are no direct peers to ICICI Prudential Rural Fund, let us look at how its benchmark has performed compared to India's stock market (Nifty 500 TRI).

Since April 1, 2015, the benchmark has outperformed the broader Nifty 500 TRI only 52 per cent of the time.

And even when it does better, the average outperformance margin is just 1.9 per cent.

However, keep in mind that the ICICI Prudential Rural Opportunities Fund NFO will be actively managed. This means the fund managers will select the stocks, so the fund's performance may differ from its benchmark, Nifty Rural TRI, in the long run.

Therefore, drawing firm conclusions based solely on the benchmark's past performance is not entirely fair.

ICICI Prudential Rural Opportunities Fund NFO: Who are the fund managers

The fund will be managed by Sankaran Naren and Priyanka Khandelwal, both seasoned professionals with extensive experience in equity markets.

Sankaran Naren is the Chief Investment Officer (CIO) of ICICI Prudential AMC . He oversees the entire investment function of the fund house.

Priyanka Khandelwal has been working at this fund house for nine years. She has been managing several schemes like ICICI Prudential FMCG Fund , ICICI Prudential Exports and Services Fund , and ICICI Prudential Transportation and Logistics Fund.

Let's look at the performance of the funds she manages.

ICICI Prudential Rural Opportunities Fund NFO: Our take

ICICI Prudential Rural Opportunities Fund is the first rural sector-oriented fund in the country.

Since the fund is untested by market ups and downs, we remain wary.

Instead, you can explore diversified equity funds with a proven track record. Flexi-cap funds are a great example of this.

Moreover, flexi-cap funds already have 19 per cent of their investors' money invested in companies linked to rural India, as of December 2024. So, you don't have to invest in a fund focusing on one particular theme.

Additionally, diversified funds invest in multiple themes, reducing their reliance on the performance of any one sector.

That said, if you are still keen to play the rural theme, we suggest you invest a small portion of your money, not more than 10 per cent, in ICICI Prudential Rural Opportunities Fund.

Also read: Ask these three questions before investing in an NFO