The NFO of the fund is currently open for subscription and closes on November 17.
Sundaram Mutual Funds has launched a second series of its 1400 days close ended equity scheme called Sundaram Select Small cap Series II. The NFO is currently open for subscription and closes on November 17.
The scheme aims to seek capital appreciation by investing predominately in equity/equity related instruments of small-cap companies. The scheme will invest atleast 65% in equity instruments of small-cap companies. The scheme can also invest a small portion in fixed income and money market securities.
Sharing the rationale behind launching this scheme, Sunil Subramanian, Deputy CEO, Sundaram Mutual Fund has said, “The launch of Sundaram Select Small Cap Series II is to benefit from the ‘Make in India’ initiative. We believe this initiative will encourage growth in export oriented smaller companies engaged in manufacturing activities. We expect these companies to deliver superior returns in three to four years time.”
The first series of Sundaram Select Small Cap Fund was launched in 2007. The scheme which matured at 2012 had delivered CAGR of 5.5%.
The scheme will be benchmarked against S&P BSE Small Cap Index. S Krishnakumar and Dwijendra Srivastava are the fund managers of the scheme.
In the recent past, a few fund houses have come out with their close ended equity funds focused mainly on small and micro-cap funds. Value Research data shows mid and small cap fund category has delivered an absolute return of 78% over a one year period. However, this category is also more prone to high volatility.
Suresh Sadagopan of Ladder7 Financial Advisories says, “Since small cap funds are less liquid and volatile, investors having high risk appetite can take moderate exposure to such funds. These funds can be recommended for diversification.”
