DSP World Agriculture Fund - for those who have taste for something 'exotic'

DSP World Agriculture Fund invests predominantly in units of BlackRock Global Funds - Nutrition Fund (BGF - NF). The primary objective of this scheme is to fulfill requirements of those investors who are looking for long term capital growth by investing in companies around the world engaged in agriculture, food and nutrition related products & services.

This is a decade old fund. It was launched in Oct, 2011 and is managed by “Jay Kothari” since 2013. In SEBI defined Risk-o-meter, it is classified in “High Risk” category. It is classified as “Fund of Funds” scheme and treated as Debt Investment for taxability point of view, albeit real investments are done in equities of companies worldwide. 

Let's see what is good and what is bad in this scheme from our perspective:

What's good?

• Brand(isation) of Food Industry - With arrival of platform aggregators & aggressive marketing by Food Brands, organized market is rapidly taking over share from unorganized market globally, thereby making “big players bigger”.
  
  The table below indicates that market share of Organized Standalone Market and Chain Market is going to rapidly increase from 28% in 2014 to 47% in 2024
  
  
  
  

  Source: www.stocktalk.in 

  
  

  Moreover with growing popularity of online food delivery services, the brandisation of food industry is going to accelerate giving opportunity to branded players to grow themselves firther bigger.
  
  
  
  
  
    
• The Organic ‘Fad’ - Organic is a new ‘buzzword’ in food industry. Many brands have been focusing on high margin organic products thereby presenting a great opportunity to investors in them to earn multi fold returns in coming years.
  
  
  
  The growing popularity of Organic food is not limited to developed nations. It is also growing in developing regions of the world including Asia and South America.
  
  
  
  

  Also, consumers are willing to pay more for organic foods than the non-organic ones. 

What's not so good ?

• Changing Global Weather Patterns disrupting Agriculture - Weather Patterns are undergoing rapid change in last decade thereby bringing risk to agriculture production and hence, can make earnings volatile for listed players in this space.
  
  
    
  
  

  Studies indicate that crop yield can drop drastically if global climate changes do occur at the same rate, thereby bringing risks to companies operating in this industry.

Future looks promising, though Past Performance raises doubts - The scheme has so far under performed against its benchmark index (MSCI ACW Net Total Return) and Nifty 50 as well. Future looks promising but past raises concerns. Lets look at SIP returns and Lumpsum returns of this scheme against its benchmark MSCI ACW Total Net Return Index.

    

Let's have a look at scheme details.

Sector wise Allocation

Key Indicators

Who can Invest into this scheme ?

• If you want to expand your investment bucket with new themes.
• If you have interest in investing into global themes such as Mining, Agriculture, Manufacturing, etc.
• If you want to play on high beta thematic themes which are also global in nature.
• If your exposure to Equity is ‘Moderate’ – neither ‘Low’ nor ‘High’
•  If you are looking for investments to achieve goal which is beyond 5 years and more… The longer the better… 

 Who should avoid this scheme ?

• If you are new to the world of investing, then this scheme is not the ideal one to start with…
• If your exposure to equity and equity-based scheme is high.
• If you have a short-term goal, then this is not the fund for you since it may be volatile.
• If you don’t understand global themes / sectoral themes. 

Wishing you all a successful investing!! 

ICICI Prudential Business Cycle Fund - High Risk vs High Reward

Equity Markets are up and investors want some new ideas and opportunities to invest. One such opportunity is offered by ICICI Prudential Mutual Fund through its New Funds Offer (NFO) called as "ICICI Prudential Business Cycle Fund". 

The fund aims to generate wealth by investing across sectors which are at cusp of growth and at the same time move out of those sectors / themes which already have seen growth and likely either top out in the future. Few important details about the scheme is as follows:

ICICI Prudential Business Cycle Fund

Scheme Objective

The scheme aims to invest in sectors / themes which is at cusp of growth and hence generate capital appreciation. 

Investment Scope

The scheme aims to invest in equity and across all kinds of stocks from large cap, mid cap and small cap. (Multi cap theme). The stock has to be in Nifty 500 index.

Benchmark Index

Nifty 500 Tri (Total Returns Index). The benchmark returns are as follows:

• 1 Year - 23.06%
• 3 Year - 8.62%
• 5 Year - 14.31%

NFO Period

December 29,2020 - January 12,2021

Lock-in Period

It is an open ended scheme with no lock-in period.

Mode of Investments Available

• Lumpsum - 5000 Rs
• SIP / SWP / STP - Available
• Top Up Available - Yes. Minimum - 1000 Rs

Suitable For:

• Suitable for those investors who are willing to take risk by investing in turnaround themes.
• The scheme objective enables investing across all sizes and sectors and hence brings maximum flexibility but discretion to the fund manager(s). So, the scheme can turn out to be either "a blockbuster" or "a buster" for investors.

Not Suitable For:

• Not for that class of investors who have already invested heavily in equities since most of stocks where this scheme will invest be already covered in other schemes.
• Since turnaround stories don't turn fruitful always, it can lead to some investments which will turn bad and hence investors must be aware that this scheme brings high risk and high reward.

Scheme Details

Presentation

https://www.icicipruamc.com/docs/default-source/default-document-library/ipru-business-cycle-fund---investor-ppt.pdf

One Pager

https://www.icicipruamc.com/docs/default-source/default-document-library/ipru-business-cycle-fund-onepager-investor-(1).pdf

Wishing you a profitable investing!