Principal Mutual Fund launches small cap fund; offer to close May 6

Principal Mutual Fund on April 22 launched an open-ended scheme predominantly investing in small-cap stocks, Principal Small Cap Fund, according to a press release from the fund house.

The new fund offer of the scheme will remain open until May 6.

Under the scheme, the fund house will offer Smart Trigger Enabled Plan (STEP) & Auto Trigger facilities. STEP aims to protect against a sharp fall in the market as it invests in a staggered manner to mitigate market-timing risk. STEP is an exclusive facility which is available only during the new fund offer.

Through STEP facility, investors can spread their investment in Principal Small Cap Fund in four equal monthly instalments and only 25 percent of the application money is invested upfront in Principal Small Cap Fund, remaining 75 percent is invested in Principal Cash Management Fund.

If the market falls 3 percent from the date of allotment, the STEP gets activated and it automatically shifts 25 percent of the initial investment to Principal Small Cap Fund. If there are no fluctuations in the market, the switch takes place at the following month end from Principal Cash Management Fund to Principal Small Cap Fund.

Auto Trigger facility allows investors to set a target rate of return and it automatically shifts appreciated amount to another fund when the target rate is achieved. Investors could use this facility to automatically rebalance their exposure to Small Caps.

Commenting on the launch, PVK Mohan, Head of Equity, Principal Mutual Fund, “Small-cap funds have the potential of becoming excellent wealth creators over the long-term period. Their exposure to large organised sectors gives them the potential to scale up.”

Besides, the companies in sectors where large & mid-cap stocks have limited presence is an added advantage. In addition, STEP Facility helps investors to reduce the market timing related risk as an investment in Principal Small Cap Fund is made in 4 instalments,” he added.

Other features:

Plans: Regular and Direct

Options: Growth and dividend

Minimum investment: Rs 5,000

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