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Sundaram BNP Paribas is set to launch its Small-Cap Fund in October-November this year. This equity scheme will, however, be a close-end one with a corpus of Rs 300 crore.
Given the market run-up in the last one year and the increasing appetite of the retail investors for mutual funds, the universe of large-cap stocks with attractive valuations is shrinking. Small and mid-cap stocks have been on the analysts’ radar as they offer better valuation and also stronger growth prospects. However, they are often less liquid and highly volatile.
The AMC found a good opportunity in this segment where there are companies with promising growth stories, but where the returns will unfold only over 2-3 years. Hence, the investors willing to invest in this fund should have a long-term approach to equity.
The Small-Cap Fund will invest in a basket of 40-45 stocks. “This will help diversify the risk and reduce volatility,” says T.P. Raman, managing director, Sundaram BNP Paribas. The small-cap arena that the scheme will consider investing in will be in the band of the 100th and 500th stock of the BSE 500. Like all equity plans, it will have growth and dividend options.
At present, the AMC manages funds worth Rs 6,000 crore of which Rs 3,800 crore are under nine equity funds.
It has applied to SEBI for permission to launch a new fixed income scheme called Sundaram BNP Paribas Savings Plus. This is a structured product, also a close-end fund. Such products offer capital protection as around 80 per cent of the corpus is invested in gilts and debt which assures an average return of 8 per cent and help protect capital. The balance is invested in equity linked futures.
Given the market run-up in the last one year and the increasing appetite of the retail investors for mutual funds, the universe of large-cap stocks with attractive valuations is shrinking. Small and mid-cap stocks have been on the analysts’ radar as they offer better valuation and also stronger growth prospects. However, they are often less liquid and highly volatile.
The AMC found a good opportunity in this segment where there are companies with promising growth stories, but where the returns will unfold only over 2-3 years. Hence, the investors willing to invest in this fund should have a long-term approach to equity.
The Small-Cap Fund will invest in a basket of 40-45 stocks. “This will help diversify the risk and reduce volatility,” says T.P. Raman, managing director, Sundaram BNP Paribas. The small-cap arena that the scheme will consider investing in will be in the band of the 100th and 500th stock of the BSE 500. Like all equity plans, it will have growth and dividend options.
At present, the AMC manages funds worth Rs 6,000 crore of which Rs 3,800 crore are under nine equity funds.
It has applied to SEBI for permission to launch a new fixed income scheme called Sundaram BNP Paribas Savings Plus. This is a structured product, also a close-end fund. Such products offer capital protection as around 80 per cent of the corpus is invested in gilts and debt which assures an average return of 8 per cent and help protect capital. The balance is invested in equity linked futures.