The scheme may invest in sectors or stocks that are part of the Nifty Transportation and Logistics TRI, which is also the offering’s benchmark.
The ICICI Prudential Transportation and Logistics Fund is an open-ended equity scheme that invests primarily in equity and equity-related securities of companies involved in transportation and logistics. The scheme may invest in sectors or stocks that are part of the Nifty Transportation and Logistics TRI, which is also the offering’s benchmark. Because the scheme may employ a buy-and-hold strategy, an investment horizon of at least five years is advised”. The Transportation and Logistics theme is regarded as a driver of economic growth. The theme includes industries broadly classified as auto original equipment manufacturers (OEMs), auto components (ancillaries), and logistics. Today’s auto industry has emerged as a necessity rather than a luxury. The auto OEM sector, with its presence across various products, provides a variety of investment opportunities, including auto ancillaries. Countries around the world have adopted EVs in significant numbers as a result of rising fuel prices and a greater emphasis on reducing emissions. According to the press release, India is expected to follow suit, creating numerous investment opportunities.
As per Chintan Haria, Head of Product Development and Strategy at ICICI Prudential AMC, “In India, transportation is a largely untapped market. The government’s new logistics policy emphasizes the sector’s critical role in the country’s economic growth. The sector will benefit from the formalization of the economy, its positive correlation with GDP growth, and the government’s initiatives to reduce costs and improve efficiency in the coming years. With muted performance in recent years, we believe the theme is emerging and there are more legs to recovery.”
In terms of logistics, the formalization of the economy, or the shift from an unorganized to an organized sector, aids in the growth of the freight industry. The logistics market in India is estimated to be worth $ 216 billion, with organized players contributing only 3.5% ($6-7 billion) in FY 2020. As Indian e-commerce shipments grow, we anticipate a disruption in this segment and a shift in market share from unorganized to organised players. Government initiatives in the future may result in cost savings and increased efficiency. (Source: Chamber of Commerce, Logistics Report, India Economic Survey 2017-2018, 2019-20)