ICICI Prudential mutual fund launches transportation and logistics fund

ICICI Prudential Mutual Fund has launched ICICI Prudential Transportation and Logistics Fund, an open-ended equity scheme predominantly investing in equity and equity-related securities of companies engaged in transportation and logistics theme.

The scheme may invest in sectors/stocks that form a part of Nifty Transportation and Logistics TRI which is also the benchmark of the offering. The scheme may follow a buy-and-hold approach and hence an investment horizon of minimum of five years is recommended.

"Transportation and Logistics theme is considered as an engine for economic growth. The theme consists of industries broadly classified under three key sectors which are Auto Original Equipment Manufacturers (OEMs), Auto Components (Ancillaries) and Logistics. Auto sector today has emerged as a space which is no longer a luxury anymore. The Auto OEM sector with its presence across different products offers multiple investment opportunities including auto ancillaries. Given rising fuel prices and increased focus to reduce emissions, countries globally have adopted EVs in a significant manner. India is expected to follow suit thereby giving rise to multiple investment opportunities," reads the release.

Chintan Haria, Head - Product Development and Strategy, ICICI Prudential AMC said, "Transportation is an under-penetrated market in India. The new policy on logistics by the government underlines the key role played by the sector in the economic growth of the country. Formalization of the economy and positive correlation to GDP growth and the Government's initiatives to reduce costs and improve efficiency, all stand to benefit the sector in the coming years. With muted performance in the last couple of years, we believe the theme is coming out of the woods and there are more legs to recovery."

Coming to logistics, formalization of economy i.e. shift from unorganized to organized sector aids in the growth of logistics space. India's logistics market is estimated at $ 216 billion out of which organized players contributed only ~3.5%($6-7 Billion) in FY 2020. We expect disruption in this segment and market share shift from unorganized to organized players as Indian e-commerce shipments growth plays out. Going forward, Government initiatives may lead to cost reduction and increase efficiency." (Data Source: Source: Chamber of Commerce, Report on Logistics, India Economic Survey 2017-2018, 2019-20)

Nifty Transportation and Logistics Index performance offtake has just begun and is expected to continue its upward trajectory.

The fund will be managed by Harish Bihani and Sharmilla D'Mello (for Overseas Investments). ICICI Prudential Mutual Fund has one of the largest and most experienced investment team in India. The fund managers are supported by a capable research team guided by a robust investment process and risk management practices.