ICICI Mutual Fund walks the talk, invests in own fund

Even as retail investors shudder to invest in credit risk fund due to the series of corporate debt defaults, ICICI Prudential Asset Management Company has pumped in ₹334 crore in its own Credit Risk Fund in the last two months. Thus, it is following what it is preaching.

The fund house had invested ₹256 crore in December and ₹78 crore in October from its networth. As of last September, ICICI AMC’s networth stood at ₹1,262 crore.

In March 2016, SEBI made it mandatory for AMCs to disclose in the Scheme Information Document the aggregate investments made by the AMC’s board of directors, fund managers and other key personnel.

Kotak Mahindra AMC had made it mandatory for its employees to invest in its schemes and DSP AMC followed in the footsteps of Kotak last year.

However, credit risk funds have been witnessing continuous outflow in the last few months. The redemptions have now slowed down a bit with a few investors going against the tide and starting to invest in these funds.

In December, the outflow from credit risk funds slowed down to ₹1,191 crore against ₹1,899 crore. The overall assets under management (AUM) of credit risk funds fell marginally last month to ₹62,705 crore from ₹63,755 crore in November.

‘No systemic risk’

While ICICI Mutual Fund has been advising investors to bet on its credit risk fund, Santosh Pai, an independent financial advisor said it is heartening to see ICICI MF walking the talk and putting its money where its mouth is.

Nimesh Shah, Managing Director & CEO, ICICI AMC, in a recent media interaction said the recent defaults by a few corporates was due to overleveraging of those companies.

There is no systematic risk in this sector and investors should relook at this category of investment as the yields are very attractive, he said.

ICICI Mutual Fund has not suffered even a single default on its debt investments and follows a stiff due diligence process before investing in any corporate bond, said Shah.

ICICI Prudential MF’s AUM stands at ₹3.4-lakh crore.

10.14 per cent return

Over the last six months, ICICI Prudential Credit Risk Fund has posted 10.14 per cent return against peer group average return of 4.79 per cent. During the last one year, it has delivered 9.49 per cent against its peer return of 4.83 per cent.

Joydeep Sen, Founder of wiseinvestor.in, said it pays to bet on managers who invest in their funds own as it indicates the future success and alignment of his objectives. This way, fund houses can clearly demonstrate their conviction to investors and distributors, he added.

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