Sundaram Mutual has entered the specialised investment fund (SIF) segment with the launch of the Select Equity Ex-Top 100 Long-Short Fund, an actively managed strategy that will invest predominantly in mid- and small-cap companies outside India’s 100 largest listed firms.
The new fund offer (NFO) opened on October 21 and will close on November 4. Sundaram is targeting collections of Rs 350 crore in its maiden SIF offering, according to the company.
The fund will invest mainly in companies ranked between 101 and 750 by market capitalisation, with a concentrated portfolio of 25 to 40 stocks. It can also take unhedged short positions through equity derivatives, capped at 25% of the portfolio.
Madanagopal Ramu, fund manager – equity at Sundaram Asset Management, said the strategy was based on an observation that earnings momentum was currently stronger outside the large-cap universe.
“Mid- and small-cap companies are producing a far higher share of businesses growing sales, EBITDA and profit by more than 25% year-on-year compared with large-caps,” Ramu said. “Large-caps offer better valuation comfort, but the growth is more visible in the ex-Top 100 segment.”