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Our Bureau

Mumbai , Nov. 8

Prudential ICICI AMC today unveiled Prudential ICICI Equity and Derivatives fund, an open-ended equity scheme. It aims to generate low volatility returns by investing in cash equities, equity derivatives and debt markets.

The new fund offer closes on December 7.

The scheme offers two options — Income Optimiser Plan (IOP) and Wealth Optimiser Plan (WOP) — which use equity derivative strategies to cater to the risk return profile of investors.

The Income Optimiser Plan will reduce the downside risk by capping the cash equity at 5 per cent. The plan seeks to generate stable and low volatility returns by protecting the downside through Index and Cash futures arbitrage strategies within the equity component of the portfolio. Arbitrage is the simultaneous purchase and sale of an asset to profit from a difference in the price. The remainder of the portfolio will be invested in short-term debt. The fund is benchmarked against the Crisil Liquid Fund Index.

The Wealth Optimiser Plan will predominantly generate capital appreciation by investing in cash equity (65 - 80 per cent) while limiting the downside risks by hedging the portfolio. The fund will also invest in other derivative strategies to generate low volatility returns. It is a relatively less conservative option and has a greater exposure to equity across large cap stocks.

WOP is benchmarked against the Crisil Balanced Fund Index and an entry load of 2.25 per cent will be applicable.

"Striking a balance between risk and return has been an endeavour of a common investor. With the tax advantages of this fund, equity and derivatives will offer more than basic risk return proposition," said Mr Pankaj Razdan, Managing Director, Prudential ICICI AMC.

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