Reliance Mutual Fund has come out with a New Fund Offering – Reliance Small Cap Fund with a objective of getting long-term capital appreciation out of predominantly investing in small cap companies. The scheme has been benchmarked against BSE Small Cap Index.
The minimum investment is Rs.5000 and SIP facility is available with a minimum amount of Rs.1000.While the entry load is nil, exit load of 2% would charged if redeemed within 12 months of the investment. The scheme has both dividend and growth options available. The issue is currently open and it closes on 9 September 2010.
So, to invest or no to?
The fund is a very aggressive small cap oriented fund which intends to invest in small sized companies. It is a high risk – high return oriented fund characterized by volatility which is expected to be smoothened out by staying invested over a longer term horizon.Although small-cap stocks are often perceived as risky relative to their large-cap counterparts, they have other characteristics that may provide an opportunity for portfolio diversification and return enhancement.
Reliance Mutual Fund does not have a mid or a small cap fund, but the fund house has a satisfactory track record in its existing equity funds, like Reliance Savings Fund. Hence, investments in Reliance Small Cap Fund can be considered by the investor with a higher risk appetite and who is willing to hold with a long term prospective only.