The DBS Chola Small Cap Fund is the latest offering from the DBS Chola fund house. This scheme aims to achieve capital appreciation by investing predominantly in equity and equity related instruments of companies with smaller market capitalization. Here, small cap companies are defined as those whose market capitalization falls between the highest and the lowest constituent of the BSE Small Cap Index.
The DBS Chola Small Cap Fund proposes to invest at least 65 per cent of the fund proceeds in equity and equity related securities of small companies. It has an option of investing upto 35 per cent in securities of companies other than smaller companies and upto 35 per cent may be invested in debt and money market instruments as well.
This fund would automatically be converted into an open ended fund after the expiry of three years.
Scheme Details
Issue Opens: November 20, 2007
Issue Closes: December 20, 2007
Type: Closed-end, equity scheme
Benchmark Index: BSE Small Cap Index
Minimum Investment: Rs 5000
Entry Load: Nil
Exit Load: Nil.
However, redemption will be permitted after deduction of unamortized initial issue expenses
Cost: Initial issue expenses, not exceeding 6 per cent of the corpus collected, would be amortized on a daily basis over the three-year closed-end tenure of the scheme.
Performance History: Fund Manager
R. Rajagopal is the designated fund manager for the scheme. He has a total experience of 13 years. His prior assignments were with IDBI Capital Market Services as Vice President Equity Investment, Principal - PNB Asset Management Co. as Senior Investment Analyst, IDBI Investment Management Company as Fund Manager, Kotak Mahindra Finance as Manager and Stock Holding Corporation of India as Executive.
Rajagopal is responsible for managing all equity and the equity portion of DBS Chola MIP Fund.
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Performance History: DBS Chola
DBS Chola AMC stared its operation in the year 1997. Currently their AUM are worth Rs. 5164 crore. The fund house's 9 equity fund offerings constitute just 6 per cent of its total assets under management. Out of its three rated equity funds, DBS Chola Opportunities has a 4-star rating while DBS Chola Midcap Fund and DBS Chola Growth have a 3-star rating.
Opinion
Funds focused on small company shares can be very wild but rewarding as well. The fund manager's track record and experience in investment banking could be useful in running a small cap fund. There are few other focused small cap fund alternatives available today. However, most mid-cap funds with modest allocation to small cap shares as well could superior risk-return trade off. Besides, the closed-end structure also makes it a relatively costly option.
Performance delivered by funds of similar peer group:
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