Should you invest in ICICI Prudential Capital Protection Oriented Fund?

ICICI Prudential Mutual Fund has launched ICICI Prudential Capital Protection Oriented Fund ( IPCPOF), a close ended scheme investing in a mix of debt and equity.

There are two different plans with varying maturities - 36 months and 60 months - available for investors. For 36 months plan, fund manager will invest approximately 80% of the money into fixed income securities and the rest in stocks. For 60 months plan, fund manager will invest approximately 70% of the money into fixed income securities and the rest in stocks. CRISIL MIP Blended Index is the benchmark for both these plans.

The rationale behind investing in this scheme is to protect the capital at the time of maturity of the scheme. The money invested in fixed income securities should grow to ensure that investors get their capital back. And the money invested in equities should fetch some capital appreciation. You can have a look at these funds if you are willing to remain invested till the maturity. Since the exit is available through stock exchange route, an exit on the exchange near net asset value seems difficult.

The fund offers growth and dividend option. You can invest a minimum of Rs 5000 in these funds. There is no exit load. You can also choose to switch funds from your investments in other schemes of ICICI Prudential Mutual Fund. The new fund offer closes on December 4.

Why invest: To invest in equity without risking capital.

Why not invest: The fund will be taxed as a non-equity fund, which means long term capital gains are taxed at lower of 10.3% without indexation or 20.6% with indexation- leading to high tax outgo.