BNP Paribas MF has filed papers with SEBI for the BNP Paribas Small Cap Fund. This fund will operate as an open-ended equity scheme allowing investors to purchase and redeem units of the scheme on all business days. Being a small cap-oriented scheme, this fund may be a high risk-high return investment proposition.
The scheme will be benchmarked against the Nifty Smallcap 100 Total Returns Index. This index has witnessed significant correction recently with 1 year returns recorded at -4.29%, however the longer term 5 year returns are high at 22.99% (as of 31st July 2018). One should however consider the possibility that the constituents of this index are significantly overvalued as the Nifty Smallcap 100 Index featured a very high P/E of 83.81 as of 31st July 2018.
As per SEBI guidelines, the BNP Paribas Small Cap Fund is required to invest 65% to 100% of its assets in equity and equity derivatives of small cap companies. Additionally, the scheme can also invest up to 35% of its assets in equities and equity derivatives of large and midcap companies. The scheme also retains the flexibility to make money market and debt investments provided such investments do not exceed 35% of scheme assets. The fund can invest up to 10% of assets in units of InvITs (Infrastructure Investment Trusts) and ReITs (Real Estate Investment Trusts). Expected asset allocation of the scheme is as follows*:
|Investment Type||Asset Allocation Range (% of total assets)|
|Equity/Equity Derivatives of Small Cap Companies||65 – 100|
|Equity/Equity Derivatives of Large & Midcap Companies||0 – 35|
|Debt and Money Market instruments||0 – 35|
|Units issued by InvITs and REITs||0 – 10|
*The above allocations are estimates and liable to change at a later date.
BNP Paribas Small Cap Fund will be co-managed by Karthikraj Lakshmanan and Abhijeet Dey. The team of Lakshmanan and Dey already co-manages other popular equity schemes of the fund house including the BNP Paribas Large Cap Fund (AUM Rs. 893 crore), BNP Paribas Multi Cap Fund (AUM Rs. 891 crore) and BNP Paribas Midcap Fund (AUM Rs. 775 crore).
Date: 04 SEP 2018