BOI AXA Mutual Fund has filed preliminary papers with SEBI for the introduction of BOI AXA Small Cap Fund. This equity scheme will primarily invest in small cap stocks and operate as an open-ended scheme. As a result, this potentially high return equity mutual fund from BOI AXA MF will allow unit purchase/redemption on all days when stock markets are open.
In line with its small cap classification, this BOI AXA MF equity scheme will invest between 65 to 100% of its assets in small cap equities and equity derivatives. Additionally, the BOI AXA Small Cap Fund will retain the flexibility to invest up to 35% of its assets in non-small cap stocks. Debt and money market investments (except securitized debt investments) are also allowed provided they do not exceed 35% of scheme assets. Moreover, investment in REIT (Real Estate Invest Trust)/InvIT (Infrastructure Investment Trust) units cannot exceed 10% of assets. This small cap fund may also participate in stock lending arrangements provided such investments do not exceed 20% of the scheme’s net assets.
Nifty Smallcap 100 Total Returns Index has been chosen as the benchmark for BOI AXA Small Cap Fund. In the past year this index has witnessed massive correction with 1 year return recorded at -4.29% as of 31st July. However the 5 year return for this index is still relatively high at 22.99%. There however seems to be significant overvaluation of the Nifty Smallcap 100 Index components as illustrated by its high P/E ratio of 83.81. Sectors with the greatest weight in this index are financial services (21%), industrial manufacturing (13%), information technology (12%) and consumer goods (10%).
Alok Singh will manage the new BOI AXA Small Cap Fund. He currently manages five other BOI AXA schemes – BOI AXA Large & Mid Cap Equity Fund, BOI AXA Credit Risk Fund, BOI AXA Conservative Hybrid Fund, BOI AXA Mid & Small Cap Equity & Debt Fund and BOI AXA Manufacturing & Infrastructure Fund. Among these, the BOI AXA Manufacturing & Infrastructure Fund is among the highest ROI schemes offered by the AMC with 1 year, 3 year and 5 year returns recorded at 7.92%, 14.38% and 20.59% as of 31st August 2018.
Date: 13 SEP 2018