What is an NFO?
NFO stands for New Fund Offer. An NFO is the initial offering period during which a mutual fund or investment company offers units of a new fund to the public for the first time.In this respect, NFOs are similar to Initial Public Offerings (IPOs) of company shares in the stock market. Both are used to raise capital for a new investment vehicle.
The NFO is an opportunity for you to invest into a new fund that may have the potential to outperform before its launch.
Important Points about a New Fund Offer (NFO):
The insurance company sets the price of the fund units in an NFO.
During the NFO period, you can subscribe to the units of the new fund at the initial offer price.
The initial offer price is a fixed amount for each unit of the fund. This price is also referred to as the "par value" or "face value".
Once the NFO period is over, the price of each fund unit increases as per market fluctuations.
You can now buy or sell your fund units like any other stock at the prevailing Net Asset Value (NAV) price.
As we have already learnt about the term NFO, let us quickly take an overview of ICICI Prudential Life Insurance Company in the following section.
About ICICI Prudential Life Insurance
ICICI Prudential Life Insurance is one of the leading life insurance companies in India. It is a joint venture between the following two companies:
ICICI Bank: One of India's largest private sector banks, and
Prudential Corporation Holdings Limited: An international financial services company based in the United Kingdom.
ICICI Prudential Life Insurance started its operations in 2001 and it is engaged in life insurance and asset management business. The company is well recognized for its financial strength and stability.
As on 01 September 2023, ICICI Prudential Life Insurance Company is launching an NFO of its first Index Fund, and the industry first Midcap Index Fund. Let us learn in detail about this index fund.
What is an Index Fund?
An index fund is a type of ULIP fund/ mutual fund/ Exchange-Traded Fund (ETF) that aims to replicate the performance of a specific market index, such as NIFTY 150 or the NASDAQ 100. The goal of this fund is to replicate the returns of the chosen index by holding a portfolio of securities that mirrors the composition of that index.
For Example: If you invest in an NIFTY Midcap Index Fund, your investment will go up and down with the NIFTY 150 Index.
Benefits: The index funds have lower management fees and operating costs as compared to active funds, low-risk, and a good way to track the overall performance of the stock market.
These funds are like a way to enjoy the growth of many companies without worrying too much about which ones will do the best.
Let us quickly understand what is an ICICI Pru Life Midcap Index Fund.
Performance of Nifty Midcap 150 vs Other Indices
Following is the performance of Nifty MidCap 150 over the years with other indices:
|As on 31st July 2023
|Nifty MidCap 150
|NSE MidCap 100
|Nifty Small Cap 250
Which are the Constituent Stocks of the Nifty Midcap 150 by Weightage?
The top 10 stocks as of 31 July, 2023, for the Nifty MidCap 150 Index are as follows:
|Name of company
|Shriram Finance Ltd.
|Max Healthcare Institute Ltd.
|AU small finance bank Ltd.
|Indian Hotels Co. Ltd.
|Tube Investment of India Ltd.
|TVS Motor co. Ltd.
|Federal Bank Ltd.
|Power Finance Corporation Ltd.
|Yes Bank Ltd
Sectoral Representation of Nifty Midcap 150 Index by Weightage
Here is the sectoral representation of the Nifty Midcap 150 Index as of 31 July 2023, by weightage:
|Automobile and Auto Components
|Oil, Gas & Consumable Fuels
|Metals & Mining
|Fast Moving Consumer Goods
|Media, Entertainment & Publication
ICICI Pru Mid Cap Index Fund
The details of ICICI Pru Life Midcap Index Fund are mentioned below:
Investment Objective: To generate superior long-term returns by investing in companies that form a part of NIFTY Midcap 150 Index.
Pre-NFO Starts From: 01 September
Pre-NFO Closes On: 25 September 2023
Fund Type: Mid Cap Index Fund
Minimum Investment Amount: Rs. 3,850 per month
Risk Category: Very High Risk
Benchmark: Nifty Midcap 150 Index
About ICICI Pru Life Midcap Index Fund NFO
The ICICI Pru Life Midcap Index Fund NFO invests is an open-ended index fund that invests in NIFTY Midcap 150 Index. The fund aims to provide you with a combination of insurance protection and investment growth.
What Are the Returns of Nifty Midcap 150 Index Over the Years?
As of July 31, 2023, the Nifty Midcap 150 has returned 16.97% since its inception.
Below are the returns of this index:
|Price Returns (%)
Why You Should Invest in ICICI Pru Life Midcap Index Fund NFO?
The benefits of purchasing ICICI Pru Life Midcap Index Fund NFO are as follows:
Balanced Sectoral Exposure: The fund provides you the opportunity to invest in companies across a wide range of sectors and industries that hold high potential of growth.
Diversification: This NFO invests in a diversified portfolio of midcap stocks, which helps to reduce risk.
Tax Efficiency: The ICICI Pru Life Midcap Index Fund is more tax-efficient than actively managed funds, as it does not incur capital gains taxes when it rebalances its portfolios.
Domestic Focus: The fund invests in Indian midcap stocks, which means that it is less susceptible to the volatility of the global economy. This can be beneficial if you are concerned about the global economic outlook.
Exposure to High Growth Companies: This fund invests in midcap stocks that have the potential for high growth. This can help you to generate higher returns over the long term.
Long Term Compounding: The fund aims to achieve long-term capital appreciation. It means that you should be patient and invest for the long term in order to reap the benefits of compounding.
Transparency: The NIFTY Midcap 150 Index is a transparent index, which means that the constituents of the index and their weights are known to the public. This makes it easier for you to track the performance of the fund.
Benefits of Investing in ICICI Pru Life NFO through Policybazaar
You can avail of several benefits of investing in ICICI Pru Life NFO through Policybazaar:
Convenience: You can invest in the NFO online through Policybazaar without having to visit a bank or insurance agent.
Comparison: Policybazaar allows you to compare different plans that contain new funds before investing in them. This way you can make sure you are getting the best deal.
Expert Advice: Policybazaar's financial experts can help you choose the right plan of NFO for your needs and goals.
Tax Benefits: You may be eligible for tax benefits on your investment in an NFO, and Policybazaar can help you understand these benefits.
Easy Redemption: You can redeem your investment in an NFO through Policybazaar at any time, subject to the terms and conditions of the NFO.
How to Buy ICICI Pru Life Midcap Index Fund NFO from Policybazaar?
Follow the steps mentioned below to purchase the Save ‘N’ Grow Plan for investing in ICICI Pru Life Midcap Index Fund NFO:
Step 1: Go to the Policybazaar website or app. Log into your account or create one if you don't have an account.
Step 2: Fill in your name, city, age, and contact numbers in the given form to check the personalised benefits of the plans.
Step 3: Select the “ICICI Prudential Life Save N Grow Plan” to take advantage of the Midcap Index Fund and click on “Get Details” tab.
Step 4: Check the details of the plan carefully and click on “Proceed” by following the prompts displayed on the screen to finalize your purchase.
Step 5: Opt for the ICICI Prudential Life Save N Grow Plan to take advantage of the Midcap Fund.
Step 5: Enter the essential details, deposit the amount you want to invest and select the mode of payment.
Step 6: Provide your KYC details and complete the payment.
Step 7: Upon successful payment, you'll receive confirmation of your purchase.
Who Should Invest in ICICI Pru Life Midcap Index Fund NFO?
The ICICI Prudential NFO is a good investment option for investors who meet the following criteria:
Have a Long-Term Investment Horizon of At least 5 years: Midcap index funds are volatile in the short term, but it has the potential to generate higher returns over the long term.
Are Looking for a Passive Investment Option with Low Costs: These index funds are a type of passive investment, which tracks the performance of the Nifty Midcap 150 Index. This makes them a good option for investors who are looking to keep their costs low.
Want to Track the Performance of the Nifty Midcap 150 Index: The ICICI Prudential Midcap Index Fund NFO can be a good option for investors who are looking to invest in the midcap segment without having to actively manage their portfolio.
Have High-Risk Appetite:These funds are riskier than large-cap funds, so investors should only invest if they can tolerate the risk of market downturns.