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Kolkata, Oct. 3

FRANKLIN Templeton has lined up a close-ended equity fund aimed at investing in mid- and small-cap companies. The proposed Franklin India Smaller Companies Fund, which will mature after 60 months from date of allotment, will be benchmarked against the CNX Midcap index.

Upon maturity, the fund will automatically turn open-ended and repurchase will be allowed on all business days. Meanwhile, to provide liquidity to investors it will provide repurchase facility at six-month intervals till maturity. Investors may redeem on stipulated dates.

"While mid-cap and small-cap stocks give one an opportunity to go beyond the usual large blue-chip stocks and present possible higher capital appreciation, it is important to note that mid/small-cap stocks can be riskier and more volatile on a relative basis," the offer document filed with SEBI has mentioned.

A redemption before 12 months will attract a charge (CDSC) of 4 per cent, which will gradually reduce. The charge after 36 months and before 48 months, for instance, will be 1 per cent.

The fund, it is pointed out, is designed for investors who seek exposure to an equity product that can take `full advantage' of opportunities available in the mid/small-cap space.

It will invest at least 75 per cent of its corpus in equity and equity related securities of companies with a market cap below that of the 100th stock in S&P CNX 500 Index (that is, top 20 per cent of the index by market cap) but may or may not be a company forming part of the S&P CNX 500.

(This article was published in the Business Line print edition dated October 4, 2005)
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