Reliance Mutual Fund, announced the launch of new fund offer (NFO) for Small Cap Fund, which will invest in small cap companies. NFO opens on August 26 and closes on September 9^th.

As for the scheme’s investment portfolio, at least 65% of the corpus is invested in equity and equity-related instruments of small cap companies, which may go up to 100% of the corpus.

According to the sources, select small caps are potential large caps of tomorrow because of their benefit of high growth prospects. Valuation gap is also visible between small caps and large caps thus giving an opportunity for alpha creation.

The minimum investment amount for the scheme will be Rs 5,000 and investors would have to bear the 2% exit load for holding period less than or up to 12 months and 1% for holding period above 12 months and ‘nil’ thereafter.

This is the first small cap company dedicated fund which would be benchmarked against the BSE Small Cap Index.

This fund will offer investors an auto switch facility from Reliance Liquid Fund (Treasury Plan) to Reliance Small Cap Fund during the NFO.

According to the sources, at Reliance MF it has always been a case of selective launching of new products and the focus is on products that offer unique proposition to their investors.