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Mahindra Manulife Mutual Fund launches small-cap scheme

The scheme may take exposure in equity derivative instruments to the extent of 50% of the equity permitted component. istock photo

The Mahindra Manulife Small Cap Fund will open on 21 November and close on 5 December and reopens for continuous sale and repurchase from 14 December.

Minimum 65% of the asset allocation will be towards equity and equity-related instruments of small cap companies, and the scheme would be benchmarked against S&P BSE 250 Small Cap Total Return Index.

According to the fund house, small-cap funds have potential to create wealth and generate alpha over long term, as they provide exposure to companies which are potential market leaders in the industries they operate in and are likely to become future midcaps as they scale up.

The scheme may take exposure in equity derivative instruments to the extent of 50% of the equity permitted component. Investment in derivatives shall be for hedging, portfolio balancing, and such other purposes as maybe from time to time under the regulations and subject to guidelines issued by Sebi or RBI from time to time.

Anthony Heredia, managing director and chief executive officer, Mahindra Manulife Mutual Fund said, “Small cap funds would be an ideal option for long term investors looking to take advantage of this change and should become a core part of investor portfolios. Given our past track record in looking at these companies across our diversified fund range, we feel this is the right time to bring this product to market, and help our investors realize their longer-term wealth creation aspirations."

The fund managers to the scheme would be Abhinav Khandelwal and Manish Lodha.

Krishna Sanghavi, chief investment officer–equity, Mahindra Manulife Mutual Fund said: “The investment objective of the fund is to generate long term capital appreciation by investing in a diversified portfolio of equity & equity related securities of small cap companies. Indian small caps offer a wide range of companies that are likely to participate and grow with Indian economy as India moves from 7th largest to 3rd largest economy in terms of size. The economy offers opportunities for many small cap companies to grow to be mid cap companies in future. Small caps as a segment also allows a wider choice in sector allocation. Valuation-wise, small caps currently offer a good opportunity for investors who want to build a long-term equity portfolio."

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