In the recent past, most mutual funds have come out with close-ended schemes that would turn open ended after a few years. So it is refreshing to see a pure open ended scheme. This one is the Small and Mid cap Fund from DSP Merrill Lynch.
The scheme will initially be open for subscription between September 29 and October 16, 2006. It would invest in a primarily equity portfolio with not more than 10 per cent allocated to debt. As the name indicates, small and mid-cap stocks would form the bulk of the portfolio.
Around 65 to 100 per cent of the portfolio will be concentrated in equity and equity related instruments that are not part of the top 100 stocks by way of market capitalisation. That does not mean that the fund will not invest in the top 100 stocks. But not more than 35 per cent of the total portfolio will be allocated to such stocks.
The regular growth and dividend (payout and reinvestment) options are available and the minimum investment in the fund is put at Rs 5,000. The fund would be benchmarked against the CNX Midcap Index and would be managed by Soumendra Nath Lahiri.
The Regular Plan would charge an entry load of 2.25% for investments less than Rs 5 crore, while the Institutional Plan would not charge any entry load. But both the plans have the same exit load structure: 0.5% exit load to be charged for investments redeemed within 3 months. Only the Regular Plan offers the facility of Systematic Investment Plan, whereby a 1% load would be charged at the time of entry and an exit load of 1.25% for investments redeemed within 2 years.
