The Hindu Business Line : Sundaram BNP plans Small Cap Fund

Sundaram BNP Paribas Mutual would soon launch its Small Cap Mutual Fund in the market. A close-ended fund, it is being launched against the backdrop of the recent fall in the markets. The Small-cap index has fallen by 38 per cent since May 10 and current valuations of most shares are attractive for mutual fund investors.

Speaking to Business Line on Thursday, Mr T.P. Raman, Managing Director, Sundaram BNP Paribas Mutual, said: "A small-cap fund has to be close-ended to avoid the implications of volatility, particularly going by the nature of small-cap markets." However, all other schemes offered by the fund house are open ended owing to the diversified range of investors.

Mr Raman said the Rural India Fund launched in March had collected Rs 1,231 crore, with about 65 per cent of money coming from the retail segment.

Majority of funds came from the northern and western regions of the country and the net asset value for the month of May was Rs 9.86. A portion of the fund still remains to be invested.

No redemption pressure

The equity fund along with other funds being offered from the mutual fund house has not been facing redemption pressures. "We actually have investors coming in at this point rather than redemptions," said Mr Raman. In contrast, on Wednesday, many mutual fund houses were net sellers to the tune of Rs 217.57 crore.

"We have funds and there is a great buying opportunity in the equity market," he said emphasising that market fundamentals are still strong and the fund house is sitting on enough cash even if redemption fears increase in the future.

The fund house is looking to amass around Rs 9,000 crore for the fiscal while its assets under management forMay stood at Rs 5,303.24 crore.