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SMILE Collects Rs 356 Crore

In what could be termed as yet another mutual fund IPO success, Sundaram's new mid-cap fund, SMILE, has reportedly attracted investments worth Rs 356 crore

In what could be termed as yet another mutual fund IPO success, Sundaram's new mid-cap fund--Sundaram Small and Medium Indian Leading Equities Fund (SMILE)--has reportedly attracted investments worth Rs 356 crore.

The fund, whose IPO closed on January 24, 2005, hopes to generate high returns through allocation to relatively risky but rewarding mid- and small-cap stocks. The fund plans to invest between 65 to 100 per cent of its assets into small- and mid-cap companies and up to 35 per cent into other equities, including ADR and GDRs. It can have high allocation to cash-up to 15 per cent. The fund also plans to participate in IPOs. It plans to minimise risk by not investing more than 5 per cent of its assets into any single stock. The fund would also follow an aggressive dividend declaration policy to book profits regularly and protect gains.

A few weeks back, Tata Infrastructure Fund had garnered Rs 772 crore in its IPO. We have reports that Franklin India Flexi Cap Fund, whose IPO is currently underway, too is attracting good money and is likely be one of the greatest IPO successes of the Indian mutual fund industry.

The IPO bandwagon was on fire in 2004 as well. All major AMCs came out with new funds and collected more than Rs 4,000 crore last year.

Fund collecting huge money through IPOs in a booming market, however, is a huge challenge to the fund managers. It would be interesting to see how they fulfil the investors' expectations in days to come.

Anyway, Sundaram's new fund has brought a "smile" to the AMC for now. Only time would tell if the fund brings smile or tears to its investors.