ICICI Prudential MF launches three life-cycle funds with pre-set equity-to-debt shift

The ICICI Prudential Life Cycle Fund 2031, Life Cycle Fund 2036 and Life Cycle Fund 2041 opened for subscription on August 26 and will remain open until September 9.

The three schemes have target years of 2031, 2036 and 2041, respectively. Their investment strategy uses a glide path, under which the permitted equity allocation declines as the fund gets closer to its target year.

Equity allocation to fall as target year nears

For the 2031 fund, equity and equity-related investments can account for 35%-50% of the portfolio when three to five years remain for maturity. The range falls to 20%-35% when one to three years remain and 5%-20% in the final year.

The 2036 fund can hold 50%-65% in equity when five to 10 years remain. This range falls to 35%-50% at three to five years, 20%-35% at one to three years and 5%-20% in the final year.

For the 2041 fund, equity allocation can be 65%-80% when 10 to 15 years remain. It subsequently moves to 50%-65%, 35%-50%, 20%-35% and 5%-20% across the five-to-10-year, three-to-five-year, one-to-three-year and less-than-one-year periods.

Debt and money-market instruments can account for 25%-65%, depending on the stage of the glide path. The schemes can also invest up to 10% in Gold and Silver ETFs, Gold and Silver ETCDs and InvITs.

What the funds will invest in

The schemes can invest in equity and equity-related securities, debt and money-market instruments, Gold and Silver ETFs, Gold and Silver ETCDs, and InvITs.

Within equities, the funds can invest across large-, mid- and small-cap stocks. The debt allocation will use duration and accrual strategies based on the fund manager’s assessment of interest rates and risk-reward.

Investment details

All three schemes offer Direct and Regular Plans and the Growth option. The minimum initial and additional investment is ₹100, in multiples of ₹1.

There is no entry load. An exit load of 3% applies if units are redeemed within one year, 2% between one and two years and 1% between two and three years. No exit load applies after three years.

The 2031 fund will be benchmarked against a composite comprising Nifty 200 TRI (50%), Nifty Composite Debt Index (45%), Domestic Price of Gold (3%) and Domestic Price of Silver (2%).

For the 2036 and 2041 funds, the benchmark composition is Nifty 200 TRI (65%), Nifty Composite Debt Index (30%), Domestic Price of Gold (3%) and Domestic Price of Silver (2%).

The fund managers are Aatur Shah, Manish Banthia, Rohit Lakhotia and Gaurav Chikane for the 2031 scheme; Manasvi Shah, Manish Banthia, Rohit Lakhotia and Gaurav Chikane for the 2036 scheme; and Divya Jain, Manish Banthia, Rohit Lakhotia and Gaurav Chikane for the 2041 scheme.

The schemes are open-ended, meaning investors can redeem units before their respective target years, subject to the applicable exit load and scheme terms.