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ICICI Prudential Mutual Fund has launched a new feature -- ICICI Prudential Booster Systematic Investment Plan (Booster SIP)-- wherein a fixed amount is invested at pre-defined intervals in the source scheme and a variable amount is transferred to the target scheme at pre-defined intervals depending on equity valuation index (EVI).
According to the press release, Booster SIP allows investors to invest in a disciplined manner to the source scheme and transfers a variable amount to the target scheme in the range of 0.1X-10X of the base installment amount depending on the EVI model at regular intervals.
Through this feature, a smaller amount of base installment is invested when equity valuation is considered expensive. Conversely, when the valuation is considered cheap, the investment will be of a relatively higher value. For example, if the base installment amount is say Rs. 10,000 then it invests anywhere between Rs.1000 to Rs. 1,00,000 (0.1x to 10x) based on market valuation. The multiplier (0.1x to 10x) is arrived at on the basis of our EVI.
Chintan Haria, head- Product Development & Strategy, ICICI Prudential AMC said, “Booster SIP leverages rupee cost averaging and value averaging by staggering investments in the target scheme through dynamic installment. Market valuation based on which the installment amount is decided is based on in-house Equity Valuation Index."
According to the fund house, the disciplinary approach of regular investments is of big advantage to the investor as he/she doesn’t need to actively track the market. Booster SIP invests in equity and debt based on dynamic installment. As a result, this feature is expected to help investors to make the most out of volatile market conditions and for those looking for an optimal investment approach to invest in for the long term.
