Tata Mutual Fund has initiated a new fund offer (NFO) of the Tata Small Cap Fund from 19th October 2018. The NFO period of this new scheme will continue till 2nd November and subsequently the scheme will reopen for continuous sale and reinvestment on 19th November. This new fund will operate as an open-ended equity scheme, hence you will be able to invest in or redeem scheme units on all days when markets are open. Tata Mutual Fund had filed draft papers for this scheme with SEBI on 9th August and recent small cap fund filings/launches have included the BOI AXA Small Cap Fund, BNP Paribas Small Cap Fund and Invesco India Small Cap Fund.
Tata Small Cap Fund will invest between 65 to 100% of assets in various equity/equity derivatives of small cap companies. The remainder comprising up to 35% of assets may be invested in equity/equity derivatives of non-small cap companies or various debt/money market instruments. Additionally, the scheme may also invest up to 10% of assets in InvITs (Infrastructure Investment Trusts) and REITs (Real Estate Investment Trusts). This small cap fund will limit its exposure to domestic securitized debt at 50% of assets and it will not make foreign securities investments or participate in credit default swaps.
Tata Small Cap Fund will utilise the Nifty Smallcap 100 TRI Index as its benchmark. The 5 year returns recorded by this index as of 28th September 2018 were recorded at 18.95%, however, this index has undergone significant correction in the past 1 year with returns of -18.13%. It is however notable that the P/E ratio of this index was recorded as 119.84 which might be indicative of overvalued index constituents that might undergo even further correction in the future. Top sectors featured on the index in terms of the weight assigned include financial services (21%), IT (13%), construction (10%), consumer goods (10%) and chemicals (8%).
This new small cap scheme from Tata Mutual Fund will be managed by Chandraprakash Padiyar. Other schemes currently managed by him include the Tata Hybrid Equity Fund, Tata Large & Mid Cap Fund and Tata Offshore India Opportunities Fund. Among these, the Tata Large & Mid Cap Fund and the Tata Hybrid Equity Fund were among the top performers in their category with 5 year returns recorded at 15.24% and 14.76% respectively as of 19th October 2018.
Key Information about the Tata Small Cap Fund NFO:
| NFO Period | 19th October to 2nd November |
| Minimum Investment Requirement | Rs. 5000 |
| Benchmark | Nifty Smallcap 100 TRI |
| Fund Manager | Chandraprakash Padiyar |
Other Funds by Tata Asset Management
| Scheme Name | 3Y Returns (%) | AUM (Rs. Cr.) | Category |
| Tata Digital India Fund | 21.92 | 111.56 | Sectoral/Thematic Fund |
| Tata Banking and Financial Services Fund | 18.01 | 253.91 | Sectoral/Thematic Fund |
| Tata India Consumer Fund | 17.4 | 973.5 | Sectoral/Thematic Fund |
| Tata Retirement Savings Fund Progressive Plan | 14.17 | 451.51 | Multi Cap Fund |
| Tata Index Sensex Direct | 14.14 | 5.04 | Large Cap Fund |
| Tata India Tax Savings Fund | 13.2 | 1398.27 | ELSS |
| Tata Index Nifty Direct | 12.23 | 11.08 | Large Cap Fund |
| Tata Retirement Savings Fund Moderate Plan | 12.09 | 659.89 | Aggressive Hybrid Fund |
| Tata Large & Mid Cap Fund | 11.46 | 1297.88 | Large & Mid Cap Fund |
| Tata Midcap Growth Direct Plan | 11.31 | 692.48 | Mid Cap Fund |
| Tata Large Cap Direct Plan | 10.75 | 799.42 | Large Cap Fund |
| Tata Ethical Direct Plan | 10.32 | 517.86 | Sectoral/Thematic Fund |
| Tata Equity PE Fund | 8.78 | 3519.81 | Value Fund |
| Tata Retirement Savings Fund Conservative Plan | 8.76 | 133.5 | Conservative Hybrid Fund |
| Tata Gilt Securities Fund | 8.01 | 117.76 | Gilt Fund |
| Tata Income Fund | 7.49 | 112.41 | Medium to Long Duration Fund |
| Tata Dynamic Bond Fund | 7.09 | 701.43 | Dynamic Bond Fund |
| Tata Hybrid Equity Fund | 6.91 | 5552.16 | Aggressive Hybrid Fund |
| Tata Liquid Fund | 6.9 | 15156.38 | Liquid Fund |
| Tata Equity Savings Fund | 6.24 | 214.93 | Equity Hybrid Saving Fund |
{Data as on Feb 20, 2020; Source: Value Research}