Reliance Small Cap Fund NFO
Reliance Mutual Fund has launched a New Fund Offer (NFO) on August 26, 2010 namely Reliance Small Cap Fund. Reliance Mutual Fund we all know is from the house of Reliance Capital owned by Anil Ambani. The fund manager for this particular fund from Reliance is Mr Sunil Singhania.
This Reliance Small Cap Fund is an open-ended equity scheme and this NFO closes on September 9, 2010 and reopens again for public offer. Since being a small cap fund, this scheme proposes to invest around 65% of its fund on equities and its related instruments of the small cap companies listed in stock market. This 65% may even go up to 100%, according to Reliance MF. Hence the risk is much higher when compared with any other existing diversified large cap funds right now!
Investment Objective: As mentioned above, this fund is going to invest primarily on small cap funds from 65- 100% and thereby generating income by capital appreciation.
Asset Allocation: Equity and equity related instruments of 65-100% on small cap companies and 0-35% on debt market.
Investment Options: Growth, Dividend (payout and reinvestment option).
Benchmark: BSE Small Cap Index.
Load Structure: No entry while there is a 2% exit load if withdrawn within 1 year of investment.
Minimum Investment: Rs. 5000 and the NFO price being Rs. 10 per unit.
Being a small cap fund and since they are going to primarily target the small cap companies in the stock market, the returns would be staggering either upwards or downwards. The risk in Reliance Small Cap Fund and other similar small cap funds are surely much higher and hence the retail investors or for those seeking to start their investment, it is better to avoid this fund instead look for older and large cap funds which has an impressive track record over a period of 5 years. But still if you are still looking to invest in it, choose the option of SIP rather than going for one-time investment.
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Asking a rival mf house (motilal) will definitely get you a negative reply.
No, Reliance Small cap fund looks good to me., especially when you are investing through sips.
The most notable thing about Small Caps is this, The BSE Small Cap fund has outperformed the Sensex and BSE Mid Cap by a wide margin of more than a huge huge 20% over a 6 year period. That sums up the issue. Yes, Small caps are volatile but they have the potential to become the next multibaggers if you spot the right one. Who better than the Reliance Star Fund Manager, Mr.Sunil Singhania to do this for you??
Although, Small Caps tend to be very volatile, they can give your portfolio a much needed ‘alpha’ adding to the overall returns. SIP Investment would be the BEST method to maximise your returns from this Fund.
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