After the successful launch of Kotak Equity Fund of Funds (FoFs) that can invest in other AMCs' funds, Prudential ICICI Mutual Fund is also planning to launch a similar kind of product —Prudential ICICI Freedom FoFs. The fund is waiting for the SEBI's clearance.
While Kotak Equity FoF (launched in July 2004) only invests in equity funds, the proposed Prudential ICICI Freedom FoFs will have five plans and would invest in all categories of funds. The plans include debt plan, income plan, balancer plan, growth plan and flexible plan.
Under normal circumstances, Prudential ICICI Freedom FoFs will invest at least 50 per cent of assets of each plan in one or more schemes of Prudential ICICI Mutual Fund. The balance will be invested in the schemes of other AMCs. These include funds of HDFC Mutual Fund, Franklin Templeton Mutual Fund, Birla Sun Life Mutual Fund, Deutsche Mutual Fund and DSP Merrill Lynch Mutual Fund. Chief Investment Officer Nilesh Shah will manage the investments under the scheme.
For selection of equity schemes, 60 per cent weightage will be given to the quantitative controls and 40 per cent to qualitative controls. Under quantitative control, 60 per cent weightage will be given to risk-adjusted return, 25 per cent to Sharpe Ratio and another 25 per cent to Beta of the funds. The qualitative controls are subjective in nature and it will be the fund managers' view on choice of the scheme, which would include philosophy of the fund, track record, out performance vis-à-vis benchmark and future strategy of the scheme.
For Debt scheme selection, the fund manager will consider factors such as asset quality, liquidity, risk-adjusted return and Sharpe Ratio.
Under normal circumstances, the asset allocation in the units of various schemes will be as follows:
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