PGIM Mutual
Fund is coming out with a NFO in the form of PGIM Small Cap Fund.
PGIM Small
Cap Fund as the name suggests, would be a small cap fund.
The fund
would be open for subscription from July 09, 2021 to July 23, 2021.
NFO details for PGIM Small Cap Fund
|
Scheme Opens |
09/07/2021 |
|
Scheme Closes |
23/07/2021 |
|
Fund Manager |
Mr. Aniruddha Naha Mr. Kumaresh Ramakrishnan Mr. Ravi Adukia |
|
Benchmark |
Nifty Small Cap 100 TRI |
|
Minimum Investment |
5,000 |
|
Fund Category |
Small Cap |
PGIM Small
Cap Fund would be an open - ended small cap fund that would be predominantly
investing in equity and equity related instruments of small cap companies.
PGIM Small Cap Fund Exit Load
10% of the
total units allotted can be redeemed/switched out to debt schemes or PGIM
Arbitrage Fund without any exit load within 90 days from date of allotment.
0.50% for
units in excess of the above that are
switched or redeemed within 90 days from date of allotment.
Nil, if the
units are redeemed or switched out after 90 days from units of allotment.
Additional reading: Click Here to read why you should not invest based on past returns
PGIM Small Cap Fund Investment Objectives
The
investment objective of the fund is to attain long term growth and capital
appreciation by investing predominantly in equity and equity related
instruments of small cap companies.
There is no
guarantee that the investment objectives of the scheme would be achieved.
PGIM Small Cap Fund Allocation
The asset
allocation for the fund would be something like this
|
Asset Class |
Minimum |
Maximum |
|
Equity and Equity Related
instruments of Small cap companies |
65% |
100% |
|
Equity and Equity Related
instruments of other companies |
0% |
35% |
|
Debt and Money market instruments |
0% |
35% |
|
Units issues by REITS and InvITs |
0% |
10% |
The above
figures are only indicative and not fixed, the fund managers have the liberty
to move across the asset classes depending upon prevailing market conditions as
long as they remain within the mandate permitted.
The fund
can also invest in REITs and InvITs if so desired.
What
is a small cap mutual fund?
A small cap mutual fund needs to invest a minimum of 65%
into small cap companies at all times.
These include all companies beyond 250 in terms of market
capitalization.
A small cap mutual fund is the most risk prone mutual fund
besides thematic mutual funds and yet the most rewarding if you know what you
are doing.
This category includes companies that have potential to be
multi baggers but also companies that are most likely to be plagued by poor
numbers, inefficient management, etc. among other issues.
A small cap mutual fund allows a fund manager a very large
pool of companies to choose from unlike a large and a mid cap mutual fund.
Therefore the performance
of a small cap mutual fund hinges the most on a fund manager and his ability to
avoid certain companies rather than his ability to pick the right companies.
Most investors sadly who invest in a small cap mutual fund
do so, either due to its high returns potential or the need to do so for
diversification, don’t be one of them.
Additional reading: Click Here to read our complete review of PGIM Diversified Equity Fund
Categorization of companies
Large Cap: 1st -100th company
in terms of full market capitalization
Mid Cap: 101st -250th company
in terms of full market capitalization
Small Cap: 251st company onwards in
terms of full market capitalization
PGIM Small Cap Fund
Investment Strategy
The fund would be investing 65% of the overall portfolio in small
cap companies with the rest either being invested in small cap companies
or other equity related instruments.
The primary objective of the fund is to attain long term growth
and capital appreciation.
The fund can invest in other schemes of the fund house
provided it does not violate any rules.
The investment strategy of the fund would be built
around a top down and bottom up approach with focus on the fundamentals of a
company as well as the management.
Every company beyond 251 in terms of market
capitalization qualifies as a small cap stock, this means that most listed
companies are small cap stocks.
Small cap stocks are the most diversified of all, both
in terms of sector as well as number of companies.
Should you invest in a small
cap fund?
You can consider a small cap fund if you satisfy the following
conditions:
If you have a time horizon of 7 years or more, this is
because small caps go through various phases and cycles before which you get
any meaningful returns which is why patience and discipline is paramount.
If you have the calmness to stay put during volatile
times which is a given with small cap funds and not panic and redeem at the
first sign of volatility.
If you want to supplement your core portfolio and diversify
your portfolio.
A small cap fund should not be your core portfolio or the
only fund in your mutual fund portfolio or take up a major portion of your
portfolio.
A small cap fund should work as if you are garnishing
a dish and should never be your main course.
“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.” - Ajit Menon, CEO, PGIM India
Mutual Fund
For portfolio enquiries, email us with your doubts at info@themutualfundguide.com
Copyright © 2021 The Mutual Fund Guide, All rights reserved
