Why Asset Allocation Funds Are A Good Bet For FY23

Nimesh Shah: Why do we come with so many thematic funds? We believe that mutual funds or fund of funds are a great way of investing in thematic funds. I have launched something called a Thematic Advantage Fund. It has a good track record.

Suppose you have a view on a sector that it should do well, perhaps the banking sector. The investor has to take the decision of entry and exit. And when he exits, suppose he invests in two months’ time, the returns come in two-three months’ time and you will have to pay full capital gains tax on it. Short-term capital gains will have to be paid on that.

We have launched a Thematic Fund of Funds where we will decide which themes to invest in. We will invest in those categories that are within the company. So, I have all the themes in the company.

Banking is a good space to invest in because private sector banks are beautifully placed. Their balance sheets are clean and the credit cycle will come round. Even if interest rates rise, private sector banks will be able to manage NIIs well. They have got a huge market to be taken from the overall banking system in the country. So, if we believe that, then there will be a huge allocation in Thematic Advantage in banking funds itself. Suppose banking does very well over the next two months, I can decrease the weightage of the banking fund.

Themewise, we like our pharma fund. We came up with the pharma fund after four years of underperformance. Pharma had not done well from 2016 to 2019. Then, we came up with this fund and it has done well. After a bad cycle of commodities for four to five years, we came up with the commodities fund, which has given amazing returns in the last two years.

For an aggressive investor who wants to invest in equity and themes, there is nothing better than the Thematic Advantage Fund. It’s a fund of fund which invests in themes, and we will decide the entry and exit point. As fund managers, we have created some internal models.

I like the banking sector today; it has corrected a lot. Auto is another place which has not done well in the last two years and is another sector that we like. We also like housing and believe that real estate is going to do very well. For seven to eight years, real estate has not done well. In the last one-year, real estate has started picking up. Inventory in the country has gone down big time. Unsold inventory is at an all-time low. We like everything after underperformance.

Either you go and invest on your own in houses, but if you don’t want to do so, you can invest in the ICICI Prudential Housing Fund. It will not only invest in real estate companies, but also in whatever goes into housing – including cement, steel, various industries that benefit from housing growth in India, and banks which do great business from lending.

Overall, it’s quite well-diversified because you get banking, steel companies, and various sectors including cement which is expected to do well. All those sectors are present in the fund. It is a great opportunity. We launched the fund yesterday. For the next 14-15 days, the NFO is out to offer ICICI Prudential Housing Fund.