However, Prudential-ICICI cannot charge management fee on the same amount twice i.e., it cannot claim fee on the investments made by say, liquid plan in ICICI Premier. ``For instance, an investor puts Rs 100 in Prudential-ICICI's liquid plan and the same is invested by the fund in ICICI Premier. Since the AMC is already charging management fee on Rs 100 invested in the liquid plan, it cannot claim a fee on that amount (Rs 100), which has been reinvested in the Premier fund,'' explained an analyst. While the funds see a growth in corpus onaccount of cross-holding, it does not translate into additional income for the AMC.

Although mutual funds belonging to the same AMC resort to cross-holdings, Prudential-ICICI is the first such case where investments have exceeded the five per cent limit. While the income and liquid plans hold more than five per cent in the growth plan, investments by ICICI Power and liquid plan account for more than five per cent in ICICI Premier. The interesting aspect is that the liquid plan holds more than five per cent of net assets in both the equity funds. Like debt funds, liquid plans have the flexibility to invest a part of their corpus in equities and equity-related instruments. However, liquid or quasi-money market mutual funds normally invest 100 or close to 100 per cent of their corpus in debt and money markets. ``This gives the fund a dual advantage, especially in the case of the open-ended growth plan. One, the holding of the liquid plan can be encashed immediately and two, this exposure helps the liquid planto earn an extra buck from equities,'' says a fund analyst. ICICI Premier is a closed-end fund with its units traded on the stock exchanges. This suggests that ICICI Power and liquid plan have bought units from the secondary market.

``Since the investment charter of income funds allow them to take some exposure in equities, funds should invest a part of their corpus in equities to earn some extra returns, especially when interest rates continue to remain low and debt funds give similar returns,'' says an analyst. Based on the latest available corpus of the two schemes and assuming that investments by the three funds account for just over five per cent (5.1 per cent) of the NAVs of these schemes, the total investments made in the two funds amount to around Rs 20 crore.