The Hindu Business Line : Principal MF plans Nifty Junior scheme

These stocks will account for at least half of the scheme's assets under normal circumstances, an exposure that can be scaled up to 100 per cent if needed. A maximum 30 per cent can be parked in money market instruments.

The proposed Principal Junior Fund will try to provide capital appreciation by allocating to Nifty Junior stocks and others with market capitalisation less than that of the company with the least market cap in the Nifty, according to the offer document filed with SEBI.

With the majority of its assets in companies with mid-sized market cap, the fund may well underperform when relatively large-cap companies start doing well, it said.

Nifty Junior, according to the NSE, represents the "next rung of liquid securities" after the Nifty and the two indices make up the hundred most liquid stocks in the domestic market. It also accounts for a key portion of the total market capitalisation.

The index in question has been scaling up in recent times. Data gleaned from the NSE indicate that it closed at 4388.20 points on February 28, representing a rise of 140 points (3.31 per cent) compared to its January 31 close. Its market cap increased from Rs 1,57,825 crore on January 31 to Rs 1,68,860 crore on February 28, nearly seven per cent increase.

Principal MF will provide investors with multiple trigger options, the offer document has added. Unit holders may judiciously use the triggers as a tool for financial planning.

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