Sundaram Mutual Launch Sundaram Select Micro Cap Series XV

Posted on May 13, 2017

Sundaram Mutual has inaugurated a brand new investment avenue known as the Sundaram Select Micro Cap Series XV, which is a close ended and high-risk scheme with the objective of capital appreciation.

Features of the product:

Objective: Sundaram’s recent launch seeks to achieve capital appreciation or a higher net annual value (NAV) and has a lower focus on income generation.

Nature of securities: A mutual fund can invest in one or more types of securities. Based on the type of security invested in, there are Money Market Mutual Funds, Fixed Income Mutual funds, and Equity Funds, among others, that can be further broken down to small cap, mid-cap or large-cap. As the name suggests Series XV mutual fund invests primarily in ‘micro-cap’ stocks which means that the stocks which are part of the portfolio are of those companies which are relatively very small.

Risk: Blue chip companies are seen as safer bets. Since this particular scheme plans to invest primarily in the exact opposite of blue-chips, the risk is fairly high. Also, plans investments in equity derivative products of larger companies also entail a fair amount of risk. A small part of the portfolio is reserved for less risky investments such as fixed income securities and money market instruments.

Window for investment: Mutual funds can be open-ended, which means that one can invest in them or sell them at any time. There is no start or end date/time period. Close ended funds have a window during which they can invest or liquidate their investment, which means that the funds are ‘locked-in’. The scheme is of the latter type, with a 15 day window that ends on May 24th, 2017.

Suitability: This product is a good choice for those who do not seek regular income from this investment and want to see it grow and then sell it at a much higher price. This product is not recommended for those who need freedom to use their funds as they like and who are risk averse. A minimum application of Rs 5000 along with no entry and exit load, makes this a viable choice for long term investment.