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Why Invest in Equities?
*Consult your tax advisor for more details. Source BSE India, Data as of Apr 30, 2021. Income Distribution cum Capital Withdrawal Option.
Capital Appreciation
Inflation adjusted returns
Tax Advantage*
Goal based investing
Liquidity
Potential Capital Appreciation in the form of Capital Gains & IDCW
Minimises the impact of Inflation on wealth creation over longterm
Returns on equity investments are subject to lower taxobligations relative to other asset classes
Probability of achieving mid to long term goals increases wheninvesting in equities. E.g. Rs. 1 Lakh invested in S&P BSE Sensex in 1979, is valued at Rs. 4.88 Crs today
Investments in open-ended mutual funds are liquid in nature andcan be withdrawn anytime when need arises subject to exit loadterms
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Our Outlook on Equities
• Global Central Banks’ policy stance, pace of earnings growth &
policies of newly elected US Gov. key triggers for equity markets
• Post COVID led slowdown, Indian economy recovery on track
and well placed fundamentally. Long Term Growth story remains
intact
• Volatility may prevail in near term given the evolving
developments around Pandemic situation & Global growth
recovery
• Barring few pockets of the market, valuations in certain pockets
still reasonable. Constructive on adding equities in staggered
manner
• Investing in select opportunities with reasonable valuations
across Marketcap may be beneficial for investors seeking Wealth
Creation in long term 3
Flexicap Funds and Investing Benefits
FLEXICAP DYNAMIC DIVERSIFICATION RISK MITIGATION MARKET CYCLES
Flexicap Fundsare schemes that
can invest in opportunities
across Marketcap spectrum
A flexicap schemeat any given point
in time, can bedynamically
overweight/under-weight across
Large/Mid/Smallcap depending on the
attractiveness
This may lead to more
investment choices thereby
leading to diversification
A diversified investment may mitigate the risk associated with
investing solely in large/mid/smallcaps
A flexicap schememay do well across
different market cycles given the
dynamic nature of the scheme in
navigating across market
capitalization
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Flexicap Funds – Positioning
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Potentia
l R
eturns
Potential Risk
Largecap
FLEXICAP
Large &
Midcap
Multicap
Midcap
Smallcap
A Flexicap Fund has the flexibility to move across Large, Mid and Smallcaps basis Valuations. Hence, flexicaps can act as good compounders over long
term with low potential risks relative to mid & smallcaps
Min. 80% in Largecaps
Min. 35% each in Large
& Midcaps
Min. 25% each in Large, Mid &
Smallcaps
Min. 65% in Midcaps
Min. 65% in Smallcaps
Positioning and Mandate is as per SEBI Mutual Funds Categorization
No capping across
Marketcap
PRESENTINGICICI Prudential
FLEXICAP FUND
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About ICICI Prudential Flexicap Fund
INVESTMENT PHILOSOPHY
Aim to identify and invest in opportunities across market caps through an in-house Marketcap model
INVESTMENT APPROACH
Mix of top-down and bottom-up approach toidentify opportunities in large, mid and small cap space respectively
SECURITY SELECTION
Stocks will be selected basisvarious factors such as, macros, companyfundamentals, valuations, etc.
INVESTMENT PROCESS
•The Fund Manager decides the Marketcap attractiveness basis prevailing market conditions
•The Fund Management team identifies opportunities in that particular segment
INVESTMENT UNIVERSE
Opportunities from S&PBSE 500 universe will be considered for investment
RE-BALANCING
The Large/Mid/Smallcap allocation will be assessed andre-balanced on a periodicbasis, based on the in-housemodel
The asset allocation and investment strategy will be as per Scheme Information Document. The portfolio of the scheme is subject to changes within the provisions of the Scheme Information document of the Scheme.
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About ICICI Prudential Flexicap Fund
Based on the in-house Marketcap model
Staggered Manner of deployment in Equity based on various internal asset allocation & valuation models
Adequate capping on stock concentration
Middle of the diversified space (moderate) as themarket-cap allocation would be manageddynamically
Marketcap Allocation
Deployment Approach
Stock Diversification
Risk Reward
The asset allocation and investment strategy will be as per Scheme Information Document. The portfolio of the scheme is subject to changes within the provisions of the Scheme Information document of the Scheme.
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ICICI Prudential Flexicap Fund – Investment Style
Please note, the above list is indicative and not exhaustive. P/E – Price to Earnings, P/B – Price to Book. The asset allocation and investment strategy will be as per Scheme Information Document. The portfolio of the scheme is subject to changes within the provisions of the Scheme Information document of the Scheme.
TOP-DOWN + BOTTOM-UP APPROACH
TOP-DOWN APPROACH
Used primarily to vet opportunities in the largecap space and focuses on factors like –
Economic indicators
Policy response
Growth
Inflation
Global Macros
Future earnings potential
Future project pipeline
BOTTOM-UP APPROACH
Used primarily to vet opportunities in the mid and smallcap space and focuses on factors like –
Growth outlook
Opportunity size
Management Track record
Historical return ratios
Valuations
HOW ISICICI Prudential
FLEXICAP FUNDdifferent?
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Market Cap Allocation Range*
*The above range is indicative and may vary basis prevailing macro economic scenario and market valuations. The asset allocation and investment strategy will be as per Scheme Information Document. The portfolio of the scheme is subject to changes within the provisions of the Scheme Information document of the Scheme.
Largecap Range
50-100%
Mid & SmallcapRange
0-50%
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• Markets may remain volatile with uncertainties regarding Global Central Bank’s stimulus stance, pace of
vaccination drives and Domestic & Global growth
• Largecaps in such a scenario may help in limiting downside and providing liquidity to the portfolio
• We also believe that the economic recovery is on track with limited lockdowns, expected improvement in pace of
vaccination and continued Govt. and RBI support to spur Growth
• Hence, mid & smallcaps may be better positioned to capture potential upside from expected economic recovery.
Therefore, given the current macro scenario and market valuations, tentative Marketcap allocation may be as
follows
The in-house Marketcap Model
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Following parameters and other economic indicators will be considered for ascertaining Marketcap allocation
Select Parameters of in-house Marketcap model
Market Cap Weight as a % of totalMarketcap
Valuation
Relative Strength Index (RSI) Differential
Please note, The above factors are not exhaustive, the scheme may or may not use the above factors. In order to manage the scheme and to ensure that the Scheme attains its investment objective, the AMC has developed an in-house model to invest across market caps in a structured manner. The asset allocation and investment strategy will be as per Scheme Information Document. The portfolio ofthe scheme is subject to changes within the provisions of the Scheme Information document of the Scheme.
Marketcap weight as a % of total Marketcap
As seen historically, Mid and Smallcap valuations (as a % of total Marketcap), are attractive postcorrections.
The model considers this parameter while arriving at final allocation
Source – Edelweiss Research. Data as of May 2021. GFC- Global Financial Crisis, NBFC – Non Banking Financial Company. Total Marketcap calculation includes top 1000 companies by Mcap. Midcap is top 101 to 250 companies by marketcap and Smallcap is 251st company by marketcap until 1000th company by marketcap listed on NSE Past performance may or may not sustain in future
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Post GFC Post US
Taper
Tantrums
Pre -
NBFC
Crisis
6.0%
9.0%
12.0%
15.0%
18.0%
Jun-05
May-06
Apr-07
Mar-08
Mar-09
Feb-10
Jan-11
Dec-11
Dec-12
Nov-13
Oct-14
Sep-15
Sep-16
Aug-17
Jul-
18
Jul-
19
Jun-20
May-21
Mid and Smallcap as a % of total Marketcap
Midcap Smallcap
Valuations – Mid & Smallcaps Vs. Largecaps
The model considers Price to Book Value (P/B) discount/premium of Mid & Smallcaps Vs. Largecaps
Source: NSE India. Data as of May 2021. GFC- Global Financial Crisis, NBFC – Non Banking Financial Company. Nifty 100 Index is considered for Largecaps
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Post GFC Post US
Taper
Tantrums
Pre -
NBFC
Crisis-70%
-60%
-50%
-40%
-30%
-20%
-10%
0%
10%
Mar/06
Mar/07
Feb/08
Feb/09
Jan
/1
0
Dec/1
0
Dec/1
1
Nov/12
Oct/13
Oct/14
Sep/1
5
Au
g/16
Au
g/17
Jul/
18
Jul/
19
Jun
/2
0
May/2
1
Mid and Smallcap Premium/Discount over Largecaps
Nifty Midcap 150 P/B Discount Nifty Smallcap 250 P/B Discount
The model also considers RSI difference Mid and Smallcaps Vs. Largecaps to ascertain whether they are in the overbought/oversold territory
Relative Strength Index (RSI) Difference
The above chart is for illustration purpose only
Mid/Smallcaps overbought to Largecaps –Reduce Exposure
Mid/Smallcaps oversold to Largecaps –Increase Exposure
IF THE RSI INDICATES:
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ICICI Prudential Flexicap Fund – An overlay of Macro Factors
GDP – Gross Domestic Product. Please note, the above list is indicative and not exhaustive and the scheme may also consider other macro indicators. The asset allocation and investment strategy willbe as per Scheme Information Document. The portfolio of the scheme is subject to changes within the provisions of the Scheme Information document of the Scheme.
The scheme can also take cues from various macro-economic indicators and accordingly take market cap and theme/sector call
Current Account Deficit/Surplus
Fiscal Deficit GDP growth & Credit Growth
Inflation Tax Revenues Capacity Utilization & Corporate
Profitability
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ICICI Prudential
FLEXICAP MODEL –Similar to Sea Voyage
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A sturdy ship tonavigate across different weather conditions
POSSIBLE WEATHER CONDITIONS WHILE ON SEA
Cyclone
Rogue Waves
Extreme Heat
REQUIREMENTS FOR SEA ROUTE EXPLORATION
POSSIBLE MARKET CONDITIONS WHILE INVESTING
Overbought Markets
Oversold Markets
Volatile Markets
REQUIREMENTS FOR FLEXICAP INVESTING
ICICI Prudential Marketcap Model –Similar To Sea Route Exploration
A robust model that aims to work across all market conditions and allocates appropriately betweenLarge/Mid/Smallcap
The above chart is for illustration purpose only
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North
East
A compass fornavigating and coursecorrection
West
South
DIRECTION NAVIGATION WHILE ON SEA
REQUIREMENTS FOR ROUTE NAVIGATION
MARKET DIRECTIONS WHILE INVESTING
Sector Attractiveness
Attractiveness of LARGE/MID/SMALLCAP
REQUIREMENTS FOR FLEXICAP INVESTING
ICICI Prudential Marketcap Model –Similar To Sea Route Exploration
An indicator that aims to determine & fine tuneMarketcapattractiveness
The above chart is for illustration purpose only
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Captain of the ship to assess risk factors, speed, time, etc.
GUIDANCE & OTHER INPUTS WHILE ON SEA
Speed
Timing of Halts
Measures to Counter Bad Weather
REQUIREMENTS FOR GUIDANCE & INPUTS
GUIDANCE WHILE INVESTING
Macro Economic Indicators
Global Indicators
REQUIREMENTS FOR FLEXICAP INVESTING
ICICI Prudential Marketcap Model –Similar To Sea Route Exploration
Fund Managers to assess macro economic factors forfine-tuning marketcap allocation
The above chart is for illustration purpose only
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WHY
ICICI Prudential
FLEXICAP FUND NOW?
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Valuations Perspective
Currently, Valuations are not cheap, Business Cycle is recovering, Positive Triggers include Economic recovery,earnings growth, etc. Negative triggers may be rising US 10Y Treasury yields and inflation. Sentiments are not
very euphoric
Market V aluations
P/E or P/B helps in ascertaining whether
the market is expensive or cheap
Business C ycle
Indicators like capacity utilization / credit growth
help in gauging the strength of business cycle
T riggers
Triggers are events which can chart the
course of market direction (positive/negative)
S entiments
Sentiments helps in understanding investors
affinity towards the equity market
Buy – Valuations Cheap
Sell – Valuations Expensive
Buy – Cycle is weak/recovering
Sell – Cycle is Strong
Negative Triggers –
e.g. COVID-19,
Positive Triggers –
e.g. earnings growth
Buy – Negative Sentiments
Sell – Positive Sentiments
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ICICI Prudential Flexicap Fund – A mixed bag
IF NEGATIVE TRIGGERS IN ACTION, LARGECAPS MAY:
IF POSITIVE TRIGGERS IN ACTION, MID & SMALLCAPS MAY:
Help to limit downside as large companies usually have better riskmanagement abilities compared to mid & smallcaps
This may provide the portfolio with stability
Largecaps may be able to deliver better returns owing to limited downside compared to mid & smallcaps
Fundamentally strong mid/smallcap companies will have good re-rating
potential
With improving growth & profitability, mid/smallcaps may
deliver Multibagger returns
Mid/Smallcaps in an upmarket may lead to better capital appreciation
than in a down market
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ICICI Prudential Flexicap Fund –A flexible and controlled approach (Marketcap Model)
The selection board of a national cricket team has the flexibility to select any player, but they need to exercise right control while selecting players for a particular format. Similarly, ICICI Prudential Flexicap Fund has the flexibility to invest across large, mid and small cap but to create a portfolio conducive for a particular market environment there is Marketcap Model coupled with Macro
factors which helps creating long-term wealth
The above example/analogy is for illustration purpose only
Test Cricket One Day T-20
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Just as a potter initially applies deft touch for creating a desired object, similarly, ICICI Prudential Flexicap Fund will in the initial phase, use a gradual equity deployment approach for portfolio construction
ICICI Prudential Flexicap Fund –Intended Initial Deployment Approach
Initial Deployment Approach for ICICI Prudential Flexicap Fund
• Taking into consideration, the market valuations at thisjuncture which are not cheap, the deployment of the schemecan take place judiciously based on the market conditions
• We may take cues on near-term equity allocation based onour various internal asset allocation and equity valuationmodels during the deployment phase
The above example/analogy is for illustration purpose only. Please note the investment strategy and asset allocation will be as per SID of the Scheme
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The asset allocation and investment strategy will be as per Scheme Information Document. The portfolio of the scheme is subject to changes within the provisions of the Scheme Information document of the Scheme.
Key Takeaways About The Scheme
Mix of Top-Down & Bottom-up approach
Based on In-house Marketcap Model
Well defined deploymentapproach basis market
conditions
Marketcap Model ensures flexibility albeit with control
Opportunistic & Dynamic in terms of Marketcap allocation
In-house model coupled with overlay of macro factors suitable
for wealth creation
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Portfolio Features
NFO Period June 28, 2021 to July 12, 2021
Type of Scheme An open ended dynamic equity scheme investing across large cap, mid cap & small cap stocks
PlansICICI Prudential Flexicap Fund – Regular Plan &
ICICI Prudential Flexicap Fund – Direct Plan
Options
Minimum Application Amount
Growth & IDCW
Rs. 5,000 (plus in multiples of Re.1)
Minimum Additional Application Amount Rs. 1,000 (plus in multiples of Re.1
Minimum Redemption Amount Any amount
Entry Load
Exit LoadLess than 12 Months 1% of applicable NAV
More than 12 Months Nil
Not applicable
Fund Manager Rajat Chandak
Benchmark Index S&P BSE 500 TRI
In addition to the fund manager managing this fund, overseas investment will be managed by Ms. Priyanka Khandelwal. IDCW – Income Distribution cum Capital Withdrawal Option. Payment of IDCW is subject to availability of distributable surplus and Trustee approval. Pursuant to payment of IDCW , the NAV of the scheme falls to the extent of IDCW payout. When units are sold and sale price (NAV) is higher than face value of the unit, a portion of sale price that represents realized gains is credited to an Equalization Reserve Account and which can be used to pay IDCW. IDCW can be distributed out of investors capital (Equalization Reserve), which is part of sale price that represents realized gains. In case the unit holder has opted for IDCW payout option, the minimum amount for IDCW payout shall be 100 (net of statutory levy, if any), else the IDCW would be mandatorily reinvested. IDCW Payout -Payout of Income Distribution cum capital withdrawal option; IDCW Reinvestment - Reinvestment of Income Distribution cum capital withdrawal option.
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SIP / SWP / STP Available
MUTUAL FUND INVESTMENTS ARE SUBJECT TO MARKET RISKS, READ ALL SCHEME RELATED DOCUMENTS CAREFULLY.All figures and other data given in this document are dated. The same may or may not be relevant at a future date. The AMC takes no responsibility of updating any data/information in this material fromtime to time. The information shall not be altered in any way, transmitted to, copied or distributed, in part or in whole, to any other person or to the media or reproduced in any form, without prior writtenconsent of ICICI Prudential Asset Management Company Limited. Prospective investors are advised to consult their own legal, tax and financial advisors to determine possible tax, legal and otherfinan- cial implication or consequence of subscribing to the units of ICICI Prudential Mutual Fund. Data source: Bloomberg, except as mentioned specifically.
Disclaimer: In the preparation of the material contained in this document, ICICI Prudential Asset Management Company Ltd. (the AMC) has used information that is publicly available, includinginforma- tion developed in-house. Some of the material used in the document may have been obtained from members/persons other than the AMC and/or its affiliates and which may have been madeavailable to the AMC and/or to its affiliates. Information gathered and material used in this document is believed to be from reliable sources. The AMC however does not warrant the accuracy,reasonableness and / or completeness of any information. We have included statements / opinions / recommendations in this document, which contain words, or phrases such as “will”, “expect”,“should”, “believe” and similar expressions or variations of such expressions, that are “forward looking statements”. Actual results may differ materially from those suggested by the forward lookingstatements due to risk or uncertainties associated with our expectations with respect to, but not limited to, exposure to market risks, general economic and political conditions in India and other countriesglobally, which have an impact on our services and / or investments, the monetary and interest policies of India, inflation, deflation, unanticipated turbulence in interest rates, foreign exchange rates,equity prices or other rates or prices etc. ICICI Prudential Asset Management Company Limited (including its affiliates), the Mutual Fund, The Trust and any of its officers, directors, personnel andemployees, shall not liable for any loss, damage of any nature, including but not limited to direct, indirect, punitive, special, exemplary, consequential, as also any loss of profit in any way arising fromthe use of this material in any manner. Further, the information contained herein should not be construed as forecast or promise. The recipient alone shall be fully responsible/are liable for any decisiontaken on this material.
Riskometer & Disclaimer
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It may be noted that risk-o-meter specified above is based on the scheme characteristics. The same shall be updated in accordance with provisions of SEBI circular dated October 5, 2020 on Product labelling in mutual fund
schemes on ongoing basis
ICICI Prudential Flexicap Fund (An open ended dynamic equity scheme investing across large cap, mid cap & small cap stocks) is suitable for investors who are seeking*:
• Long Term wealth creation
• An open ended dynamic equity scheme investing across large cap, mid cap & small cap stocks
*Investors should consult their financial advisers if in doubt about whether the product is suitable for them.