ICICI Prudential Asset Management Company today launched ICICI Prudential U.S. Bluechip Equity Fund, a mutual-fund scheme that will use Morningstar's U.S. equity analysis and model-portfolio strategies as one of the key inputs to their stock research.
ICICI Prudential U.S. Bluechip Equity is India’s first diversified equity scheme investing directly in U.S. bluechip equities.
In line with its philosophy of identifying and investing in U.S. bluechips that are non-cyclical global businesses owning successful global brands, ICICI Prudential US Bluechip Equity Fund will focus, among other research inputs, on Morningstar’s 'Wide Moat Focus Index', which comprises of stocks that have sustainable competitive advantages.
Morningstar’s research support will also cover suggestions on the stocks in order to construct the portfolio, information on market outlook and broad investment strategy.
Morningstar’s equity research and the wide-moat index
We evaluate stocks for what they truly are--pieces of a business. Instead of prognosticating short-term price movements or momentum, our analysts focus on determining the value of a business, its risks, and whether the stock price accurately reflects both the value and risk. (Read more about how Morningstar calculates stocks’ fair values here.)
A key factor in our equity research is looking for companies with moats, or sustainable competitive advantages, that a company could gain either via having high switching costs for customers, patents or copyrights or simply being a low-cost producer.
The concept of buying stocks with wide moats was first talked about by the legendary Warren Buffett who believes it’s important for companies to have durable competitive advantages to achieve superior cash flows for long periods of time.
We took the Oracle of Omaha’s philosophy further and codified the concept by introducing the Morningstar Economic Moat Rating for stocks on a scale of None, Narrow or Wide.
Then, in 2002, we put together two indexes: the Wide Moat Index, comprising of all stocks rated as having a wide moat by our equity analysts, and a Wide Moat Focus Index, which comprises of 20 wide-moat stocks that are the most undervalued.
The market-beating results of the two Morningstar indexes have been discussed here.
The new fund offer (NFO), which opened on June 18, will allow Indian investors to access the world’s largest and most prominent market and brands therein. Additionally, this fund provides an opportunity to Indian investors to invest in sectors like semiconductor, aerospace, etc which may not be available in India.
Investors can invest in lumpsum or through SIP in Regular option. Minimum application amount is Rs. 5,000 (plus in multiple of Re.1). This fund will have the benchmark index of S&P 500.