The NFO opened for subscription on May 20 and closes on June 03.
Union KBC Mutual Fund has launched an open ended equity fund called Union KBC Small and Midcap Fund. The NFO opened for subscription on May 20 and closes on June 03.
Sharing the rationale behind launching this fund, G Pradeepkumar, Chief Executive Officer, Union KBC Asset Management said, “We feel that it’s a good time to launch this fund because there is lots of positive sentiment in the market post the election results. The valuation of mid and small cap companies are very attractive as compared to large cap companies. These stocks are currently trading at a PE of 16 as against PE of 22 in 2008. Also, large cap companies have already benefited in the recent rally but small and mid-cap companies are yet to catch up.”
The scheme aims to achieve long term capital appreciation by investing in a portfolio consisting of equity and equity related securities, predominantly of small and midsized companies. The scheme will also invest a small portion in in debt and money market instruments.
On the fund management strategy, Pradeepkumar said that the fund will follow a bottom up approach in selecting stocks. “The portfolio will consist of 40 stocks. The stocks will be selected on the basis of two key factors - sustainability and scalability. Both these factors indicate earning potential and growth of a company. Also, the fund manager would consider other parameters like valuations, management strategy, corporate governance etc. while picking the stocks.”
Benchmarked against S&P BSE Midcap Index, the minimum application amount is Rs. 5,000. The scheme will charge an exit load 1% if redeemed within one year from the date of allotment. Ashish Ranawade is the fund manager of the scheme.
Pradeepkumar told Cafemutual that the fund aims to collect Rs. 100 crore during the NFO.
