New Fund Offer: Sundaram Emerging Small Cap Fund - Series VII

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What Is NFO and What Are its Benefits?

NFO or New Fund Offer is a subscription offering for the first time for a new fund by the respective fund house. A new fund offer is for raising capital for further purchasing the securities.

The main benefit of investing in an NFO is the net asset value at which you purchase the units. Here, the NAV is Rs. 10 which is much less than the other schemes’ NAV that already exist.

What Are Close-Ended Funds and the Risks Involved in it?

Close Ended Funds are those funds that are open for purchase for a short time and cannot be redeemed until the maturity period. Unlike open-ended funds, here the fund managers do not create new shares to meet the demand of the investors. They involve the following risks:

1. An investor won’t be able to redeem the units before the maturity period and the liquidity will only be available by selling the units via Demat in stock exchange.
2. The benefit of investing in these funds can be reaped only at the time of maturity, and thus if an investor sells via Demat, then he may not receive the required results.

Who Should Invest in Sundaram Emerging Small Cap Series 7?

Behind every investment made, there lies a reason or motive with which an investor invests his money. Given below are certain points which will help you finalize whether or not you should invest in this fund.

• Since, this is a small-cap fund, people who are interested in making an investment in the category, may invest in it.
• Aggressive investors who are ready to bear moderately high risk on the principal amount invested to earn well, may invest in it.
• If you are looking to invest in your idle money for a long-term, then this scheme might just be the right option for you.

Facts About Sundaram Emerging Small Cap Fund Growth

Maturity Period: This fund house has an investment tenure of 5 years under this scheme. This time will be calculated from the date of allotment and in case the maturity date is not a business day, the subsequent working day will be considered as the maturity day for this scheme.

Asset Allocation:

1. Under this fund, a minimum of 65% and a maximum of 100% assets are aimed to be invested in the equity and equity related instruments of small cap companies with the risk involved being high.
2. It aims to invest up to a maximum of 35% of the assets in other equities such as large cap and mid cap stocks. Large cap stocks are the top 100 companies in terms of the full market capitalization whereas mid cap stocks are the 101st to 250th companies in terms of the full market capitalization. Here, the risk involved on the investment is high.
3. It may invest up to a maximum of 35% of the total assets in the fixed income and money market securities with the risk involvement being from low to medium.

Sundaram Emerging SmallCap Fund: Investment Strategy

• This scheme mainly focuses on providing investors with an opportunity to invest in a diversified portfolio of small cap funds.
• Stocks that have been added to the portfolio will be tested on the last working day of every calendar quarter to see if it is fulfilling the investment needs. If not, the fund managers will liquidate the same in a phased manner.
• It aims to study the industry and management while selecting the small-cap stocks for investment.
• It follows the bottom-up approach while constructing the portfolio and manages the same in accordance with the applicable SEBI/RBI regulations that come out from time to time.

Why Should You Invest in a Small-Cap Fund?

1. Being a small-cap fund, it is more volatile than the large and mid-cap funds, and thus holds high growth scope.
2. Seeing the current market scenario equity funds are anticipated to perform well with time.
3. Considering the growth of the Indian market and easy credit facility, many companies including the new-start ups with the funding that they receive, may lead to remarkable growth.
4. It is backed by Sundaram which is a known name when it comes to mutual fund investments because of its glorious schemes.

Conclusion

This was a brief on Sundaram Emerging Small Cap Fund by the experts at MySIPonline. To read about the fund house and other schemes that it offers, you may visit their page on the same platform. For any query, feel free to contact us at 9660032889.