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 will close on July 23, 2021, a release said.
The Benchmark Index of the fund is Nifty Small Cap 100 Total Return Index. The investment objective of the scheme is to achieve long term capital appreciation by predominantly investing in equity and equity related instruments of small cap companies.
The fund shall invest a minimum of 65% 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 has good potential to create wealth and generate alpha over the long term. The economy, as it revives and demand plays out, the full value chain across sectors benefits, including small cap companies. Along with economic data improving, corporate profitability of small cap companies can be expected to improve.
“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,” PGIM India Mutual Fund Ajit Menon.
“Industry consolidation is more pronounced in the areas where the small caps operate because most small-cap companies compete with the unorganised 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.
“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,” said PGIM India Small Cap Fund Sr. Fund Manager-Equity and fund manager Aniruddha Naha.