Take advantage of market opportunities

The one common characteristic of equity markets is volatility. The constant churn of the markets makes for decision making tough ie, whether to invest or not and if so where to invest? This predicament often leads to mistakes in judgement leading to losses or prolonged periods of unproductive investments. Moreover, the post-pandemic world has seemed to warp the timelines and hence the change in sectors or trends too.

The reduced time for each cycle has put strain on the investing decisions. Though, the idea of investment is for the long term, it's always good to take advantage of the market opportunities that are presented time-to-time and ride the cycle. This could provide an additional alpha to the portfolio while ensuring the allocation remains in the desired risk tolerance.

The ever-evolving geopolitical situation, the ravaging war and the Central bank's actions against inflation has disrupted the currencies across the globe.

This is where ICICI Prudential Thematic Advantage Fund-of-fund comes to one's rescue. As the name suggests it's a feeder fund to other funds investing exclusively in various themes and sectors. This fund allocates across multiple sectoral or thematic funds depending upon the discretion of the fund manager in the sole aim to benefit from the emerging themes at any given point of time.

ICICI Prudential AMC (Asset Management Company) has a wide range of funds that serve almost all sectors and/or themes that becomes an easier task to allocate. However, the fund has the flexibility to even invest in a fund of another AMC, if they find it judicious. This flexibility protects the interests of the investor while attempting to remain relevant amid the changing trends of the markets. By the very next month ie, in March 2019, the fund has allocated close to a half of the fund into infrastructure fund, a fifth towards banking & financial services fund while retaining the allocation to exports even as the total debt was brought down to a little over 1 per cent.

By June 2020, the fund has allocated about a tenth towards Commodities fund while retaining the aggressive stance, though reducing a bit of concentration to 23 per cent in pharma. By the end of the year, Dec ember 2020, the fund added to banking and financial services with about 13 per cent, Opportunities fund to 38.5 per cent, 28.5 per cent towards infrastructure, close to 8 per cent in pharma and about 8.5 per cent in commodities fund.

By August 2021, the fund increased the infrastructure to about 51 per cent, maintained the allocation to pharma at about 9 per cent, exports & services to nearly 10 per cent, a 5 per cent allocation to FMCG, banking & financial services at 18 per cent and a bit towards floating rate fund.

Keeping with the changes, the fund has changed the stance with close to 14 per cent in floating rate fund by March 2022. Pharma increased to 21 per cent, about 28 per cent to banking & financial services, over 8 per cent to infra, about 5 per cent to tech/IT, over 6 per cent to transportation & logistics while over 4 per cent to short term debt.

Closing September of this year, there is an allocation of over 15 per cent to US Bluechip equity, about 8 per cent to exports, 30 per cent to banking, over 15 per cent to tech, about 14 per cent to pharma and over 10 per cent to floating rate. If one were to observe these allocations, one could clearly see the fund has been agile in identifying the trends and allocating to them accordingly.

The fund could change these allocations as-and-when appropriate and wouldn't need to wait for the month-end to re-adjust. Over a year back when I first mentioned about this fund, we were using this as a tactical allocation to the portfolios but with the consistent performance and philosophy of the fund, we now consider to be placed in the investors' strategic portfolios.

However, investors are advised to consider their risk appetite before investing in this fund as the fund is aggressive in nature. A staggered approach would provide better results.

(The author is a co-founder of "Wealocity", a wealth management firm and could be reached at [email protected])