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Tata Small Cap Fund: NFO review

Tata Mutual Fund launched a new small scheme called Tata Small Cap Fund on Friday.

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Last Updated: Oct 23, 2018, 10.33 AM IST
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Tata Mutual Fund launched a new small scheme called Tata Small Cap Fund on Friday. The scheme, as its name suggests, will be mandated to invest 65 per cent of its total assets in stocks of small companies. The NFO will close for subscription on November 2.

Chandraprakash Padiyar, senior fund manager, will manage the new smallcap fund. The scheme will be benchmarked against Nifty Small cap 100 TRI Index. The fund manager believes that the new scheme will have a good starting point in the market. “We have seen a good correction in the smallcap space and the valuations are attractive. This is going to help the scheme in the long run,” says Chandraprakash Padiyar.

The fund house believes that the time is right to launch a smallcap scheme. According to the offer document of the scheme, the recent market valuations suggest significant potential investment opportunities in smallcaps. This presents an opportunity to discover great businesses for investing which have the potential to grow manifold in the coming years.

Should you invest?
Even though mutual fund advisors agree that it is a good time to start a smallcap scheme or even to start investing in a smallcap scheme, they believe that an established fund would be a better choice. “Sure, the valuations in the smallcap segment are attractive but one should invest only when one has a long term horizon,” says Pankaj Gera, a certified financial planner. “And as always, opt for a scheme with a good track record. This scheme might be entering the market at a good time, but it is a plain vanilla smallcap scheme. You will find consistent performers already established in the market. That is a better option.” Says Gera.

Scheme over a glance:
Fund Manager Chandraprakash Padiyar
Benchmark Nifty Small cap 100 TRI Index
Min. Investment Amount Rs. 5,000/-and in multiple of Re.1/-thereafter
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: Regular and direct plans with growth and dividend options

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