New Fund Offer: PGIM India Small Cap Fund opens tomorrow; check key details

New Fund Offer - Representative image

PGIM India Mutual Fund has announced the launch of ‘PGIM India Small Cap Fund’. The NFO will open for subscription on July 9, 2021 and close on July 23, 2021. The Benchmark Index of this NFO is Nifty Small Cap 100 Total Return Index while its investment objective is to achieve long term capital appreciation by predominantly investing in equity and equity related instruments of small cap companies.

PGIM India MF said in a statement that the new fund will invest a minimum of 65 per cent of its corpus in the small cap companies and may also seek to participate in the growth of other equity and equity related instruments in order to achieve optimal portfolio construction. The Fund will be managed by Aniruddha Naha (for equity investments), Kumaresh Ramakrishnan (for debt and money market investments) and Ravi Adukia (for overseas investments).

Investing in small caps is believed to have a good potential to create wealth and generate alpha over the long term.

Post covid-19, if the country’s economy revives and demand plays out, the full value chain across sectors including small cap companies may benefit. Along with economic data improving, the corporate profitability of small cap companies may also improve.

Small-cap growth expected

Commenting on the NFO, Ajit Menon, CEO, PGIM India Mutual Fund, said, “We believe that listed entities in the small-cap segment are the biggest beneficiaries of developments such as significant recovery in corporate earnings, expected in the coming months coupled with multiple tailwinds like the government trying to boost manufacturing through PLI schemes, lower taxation, and various concessions.”

“Industry consolidation is more pronounced in the areas where the small caps operate because most small-cap companies compete with the unorganized players. In order to capture quality investment opportunities, we have launched the PGIM India Small Cap Fund. Idea is to help investors gain exposure to business segments like construction, textiles, real estate, chemicals and agrochemicals, Industrials, paper and the like that find limited representation in the large-cap space,” he added.

Aniruddha Naha, Sr. Fund Manager-Equity and fund manager for PGIM India Small Cap Fund, said, “The best pockets of returns over time are good quality small caps which are supported by earnings and reasonable valuations. They benefit from both the legs of earnings growth and a chance of a PE rerating, which helps them graduate from a small cap to a midcap and eventually a large cap.”

Minimum investment required

The minimum amount of investment in the NFO for initial purchase is Rs. 5,000 and in multiples of Re.1 thereafter. Additional purchase can be made for a minimum amount of Rs.1,000 and in multiples of Re.1 thereafter.

For Systematic Investment Plan (SIP) in the NFO, minimum five instalments of Rs. 1,000 each and in multiples of Rs.1 thereafter for Monthly and Quarterly SIP is required. The minimum SIP Top up amount for Monthly and Quarterly SIP is Rs. 100 and in multiples of Re. 1