ICICI Prudential Mutual Fund Launches ICICI Prudential Diversified Equity All Cap Active FOF

Highlights:

• An open ended Fund of Funds scheme investing predominantly in the units of diversified domestic active equity-oriented schemes based on varied market caps.
• Designed to dynamically allocate across market cap strategies based on in-house valuation and market-cap framework.
• The underlying portfolio provides a good diversification of investment styles
• Benchmark: Nifty 500 TRI
• NFO Period: March 2, 2026 – March 16, 2026

ICICI Prudential Mutual Fund announced the launch of ICICI Prudential Diversified Equity All Cap Active FOF, an open ended Fund of Funds scheme investing predominantly in the units of diversified domestic active equity-oriented schemes based on varied market caps. The benchmark of the Scheme is Nifty 500 TRI.

Commenting on the launch, Sankaran Naren, ED & CIO, ICICI Prudential AMC said: “Over the past few years, we have seen phases of exuberance followed by corrections across market segments. Behavioural biases tends to drive investors toward recent outperformers, which often leads to sub-optimal outcomes. Through this FOF, we aim to provide investors access to a structured market-cap allocation framework that remains responsive to changing market dynamics. This approach seeks to combine flexibility with a structured framework, enabling participation across the market-cap spectrum in a measured manner.”

Case for Investing Across Market Caps

Equities have historically created wealth over the long term despite market cycles and volatility. However, no single market cap consistently outperforms. During periods of exuberance, mid and small caps tend to witness sharper rallies but they also face sharper drawdowns during corrections. Over time, market cap leadership rotates with large caps, midcaps and small caps taking turns to lead across different phases.

Under-performance in one segment is offset by strength in another, making an all cap approach more resilient across market cycles. However, entering the right market cap at the right time is a challenge. This is where ICICI Prudential Diversified Equity All Cap Active FOF comes in handy. This offering aims to dynamically invest across market caps through active equity schemes based on an in-house market-cap framework. The in-house framework is based on various prevailing broad market parameters which are dynamic in nature.

Why Now?

Indian equities witnessed healthy returns across market cap segments until 2024. Since then, domestic market exuberance has come off and valuations across the board have tapered off suggesting that froth has moderated to an extent. However, three important developments in the form of income Tax cuts, GST reductions, and a significant decline in interest rate provided meaningful support to the economy. These measures together have created a further supportive environment for growth going forward.

As a result, the relative positioning of India has improved. Indian equity valuations have moderated as compared to a year ago and is more favorably placed as compared with many other global markets. In the interim, given geo-political tensions, complex trade dynamics, choppy FII flows and uncertainty around global monetary policy stance, volatility may persist. In such an environment, schemes with flexibility to invest across market caps through a structured framework may enable calibrated participation across evolving market cycles.

ICICI Prudential Diversified Equity All Cap Active FOF

The asset allocation and investment strategy will be as per Scheme Information Document. The portfolio of the scheme is subject to changes within the provisions of the Scheme Information document of the Scheme.

Investment Process

The investment process follows a structured, top-down framework* anchored in continuous monitoring of macro and microeconomic parameters. Key variables such as growth trends, inflation dynamics, interest rate cycles, domestic demand conditions and global market developments are evaluated to form a view on equities. Based on this assessment, the relative attractiveness of different market cap segments is determined using fund manager insights and an in-house analytical framework. This evaluation guides allocation decisions across large cap, mid cap and small cap strategies. Underlying schemes are then selected to reflect the prevailing market cap outlook. The process is designed to institutionalise discipline, integrate economic signals into portfolio Construction, and enable calibrated participation across evolving market cycles.

* The framework and portfolio shall be reviewed by the Fund Manager on a periodic basis and accordingly suitable changes shall be carried out in order to achieve the scheme objectives.

In-house framework

The following parameters and other economic indicators are considered while constructing the market-cap framework. In addition to the framework observations, Fund Managers will decide on the final allocation.

Disclaimer: The article is for informational purposes only and not investment advice.