NFO to open on October 19 and close on November 2, 2018
Tata Mutual Fund announces the launch of new fund offer (NFO) for Tata Small Cap Fund – an open-ended scheme, which aims to invest in stocks of small cap companies that are likely to grow substantially faster than the market and have the potential to become mid-caps in the future.
The NFO will open on October 19 and close on November 2. The fund will be managed by Chandraprakash Padiyar, senior fund manager, who currently manages, Tata Hybrid Equity Fund and Tata Large & Mid Cap Fund.
Opportunities for Small Caps:
• Small is getting bigger: In the last decade, India has seen a consistent growth year on year. Small Cap stocks, with strong businesses, have also grown significantly in this time frame and have demonstrated the potential to keep growing in the coming years.
• Scheme Reclassification: As per the recent scheme reclassification within equity funds, large-cap companies are the top 100 listed companies based on the average full market capitalisation of the previous six months, mid-cap are in the 101st to 250th company, and small-cap are in the 251st company onwards.
As of June 2018, end, the 251st company had a market cap of 9849 cr. Interestingly there are 4826 companies in the small cap definition out of which almost 247 companies with a market cap between 3000 cr to 9849 cr.
This presents a large opportunity of businesses to choose from, with high corporate governance, strong balance sheets and potentially high profit growth performance. There are many Indian and global MNC trading in the small cap space with strong business profile. Hence, there is a potential opportunity for long term investors.
• Breeding Ground for Multi baggers: As compared to large and mid caps, small caps have a higher spectrum to grow in every aspect of a business. Over time, a fundamentally strong small cap business has a potential to grow multi-fold in terms of their market cap and become a formidable business entity, rewarding their stakeholders.
• Valuations: Recent market valuations suggest significant potential investment opportunities in Small caps. Most of the coverage in the markets is restricted to the top large and mid cap stocks and the coverage reduces substantially towards small cap stocks. This presents an opportunity to discover great businesses for investing which have the potential to grow manifold in the coming years
Speaking on the opportunity in the small cap space, Chandraprakash Padiyar, Senior Fund Manager, said, “Warren Buffet once said “be fearful when others are greedy and greedy when others are fearful”. I would like to point out that valuations are becoming attractive in many cases which in turn can lead to better return potential in the long term. Given the market correction, especially in small cap stocks, there is an interesting long-term investment opportunity with the Tata Small Cap Fund.”
Speaking on the launch of Tata Small Cap Fund, Prathit Bhobe, CEO & MD, said, “We believe our experience in bottom-up stock picking will help identify opportunities in the small cap space. Indian markets offer good investment opportunities and despite the short term volatility, we recommend that investors look to invest with a long term horizon.”
Scheme Name TATA SMALL CAP FUND
NFODates Opens on 19th October, 2018. Closes on 2nd November, 2018
Investment Objective The investment objective of the scheme is to generate long term capital appreciation by predominantly investing in equity and equity related instruments of small cap companies. There is no assurance or guarantee that the investment objective of the Scheme will be achieved. The Scheme does not assure or guarantee any returns.
Definition of Small Cap Companies: Small Cap companies are those companies which are classified as small cap companies by Securities and Exchange Board of India(SEBI) or Association of Mutual Funds in India (AMFI). At present Small Cap: 251st company onwards in terms of full market capitalization.
Type Of Scheme An Open Ended Equity Scheme predominantly investing in small cap stocks.
Fund Manager Chandraprakash Padiyar
Benchmark Nifty Small cap 100 TRI Index
Min. Investment Amount Rs. 5,000/-and in multiple of Re.1/-thereafter
Load Structure Entry Load: Nil; Exit Load: 1% of the applicable NAV, if redeemed or switch out from the scheme on or before expiry of 24 Months from the date of allotment of units.
Plans & Options Regular & Direct Plans with Growth & Dividend Options
About Tata Asset Management
Established in 1994, Tata Asset Management Ltd is the investment manager for Tata Mutual Fund.
It is among the oldest and most trusted fund houses in India with an average monthly asset
under management (AAUM) of Rs. 53,149 crore (as on September 30, 2018) and an investor
base of over 18,00,000 investors.