Sundaram Emerging Small Cap – Series IV NFO is the latest New Fund Offer (NFO) by Sundaram Mutual Fund. This scheme is open for subscription from 22nd May 2018 to 5th June 2018.

The risk level of this fund is moderately high. Units of this fund shall be offered at ₹10 during the 15-day period of the new fund offer.

It is a close-ended equity scheme investing predominantly in small-cap stocks. According to the fund house, this particular NFO is suitable for investors seeking long-term capital growth.

Details of the NFO

 Details Info
Issue opens on 22nd May 2018
Issue closes on 5th June 2018
NFO price ₹ 10
Minimum Investment ₹5,000
Entry Load NIL
Exit Load NA
Risk Moderately High
Benchmark S&P BSE 250 Small Cap Index
Scheme Type Closed-ended equity scheme investing in small-cap stocks
Plans Regular and Direct Plans
Options Growth, Dividend Pay-out and Dividend Sweep
Fund Managers S Krishnakumar & Dwijendra Srivastava

Investment Objective

To seek capital appreciation by investing predominantly in equity/equity-related security of companies.

Small cap funds invest a large portion of their investment in companies with a relatively small market capitalization i.e. having a market cap of less than ₹500 crore.

These are high-risk investments due to their exposure in high performing, volatile equities. On the up-side, these funds have exponential growth potential and they provide high returns on investment.

Asset Allocation

The fund primarily invests in equity and equity related instruments of small-cap companies. Other equities being large-cap, mid-cap stocks, fixed income and money market securities.

The asset allocation towards high-risk equity and equity related instruments of small-cap companies can range from 65%  minimum to 100%, which is the maximum limit.

Similarly, the asset allocation towards high-risk equity instruments of large-cap and mid-cap companies can range from 0% (minimum limit) to 35% (maximum limit).

Also, the asset allocation towards fixed income and money market securities can range from 0% at a minimum to 35% at the maximum.

This scheme will not invest in securitized debt and foreign securities. However, the scheme shall invest in repo and corporate bonds up to the applicable limit of 10% as per the SEBI circular.

It is important to note that to achieve the desired objectives, the scheme could use derivatives for trading, hedging and portfolio balancing.

However, in an effort to limit risk, the exposure to derivatives will be limited to 50% of the net asset value of the scheme at the time of the transaction.

In total, the cumulative gross exposure to equity, debt, money market instruments and derivatives shall not exceed 100% of the net assets of the scheme.

Investment Strategy

  • +The scheme aims to provide its investors a reasonably diverse portfolio which mainly invests in small-cap stocks.
  • +These stocks are intrinsically more volatile than the large-cap or mid-cap stock and consequently offer higher returns as well.
  • +The stocks in the portfolio will be verified with the mentioned criterion on the last working day of every calendar quarter.
  • +In case the stock fails to fulfill the said criterion, the fund manager will take the necessary steps to liquidate the holdings in a phased manner.
  • +The investment manager shall follow a bottoms-up approach in constructing the portfolio and managing it.
  • +Towards the end, the analysis shall focus on the past performance and future prospects of the company. Along with this, it will also focus on the business prospects, financial health and the competitive edge for the benefit of the minority shareholders.
  • +The focus will be laid on value investing. After this exercise, the companies that adequately satisfy the prescribed criteria may be included in the portfolio.
  • +As a note, prospective investors should keep in mind that investment in small-cap stocks could call for longer holding periods. Moreover, the fund may also pursue opportunities in public offerings popularly termed as IPOs.
  • +The fund manager, as per his discretion and requirement, may invest across sectors, take cash calls, change allocation between the equity and fixed-income asset classes in a dynamic manner within the permitted limit.
  • +Our portfolio will consist of around 50 stocks and one of the criteria’s for selecting the stock will be liquidity. For risk management, once a stock has been red flagged, the team will have an Investment committee meeting which will decide if the need to exit the stock exists.

Fund Managers

The fund is managed by two very experienced fund managers,Krishnakumar S and Dwijendra Srivastava.

Krishnakumar S

Krishnakumar S, aged 49 years, has a cumulative experience of approximately 15 years. He has a B.E. (Hons) and PDGDBA degree. He is the fund manager for a plethora of schemes under the Sundaram fund house.

Some of them being Sundaram Select Midcap, Sundaram S.M.I.L.E, Sundaram Small Cap Series, Sundaram Value Fund – Series I, Sundaram Diversiffied Equity Fund, Sundaram Select Micro Cap Series and Sundaram Long Term Micro Cap Series IVI.

He is also the co-fund manager to 3 schemes, namely Sundaram Hybrid Fund Series M & N, Sundaram Rural India and Sundaram Infrastructure Advantage Fund.

Dwijendra Srivastava

Dwijendra Srivastava, aged 43 years holds a B.Tech, CFA and PGDM (Finance) degree and is highly qualified. He too has over a decade of experience and has experienced various bullish and bearish cycles.

He is the co-fund manager to a plethora of schemes, some of them being Sundaram hybrid Fund Series, Sundaram Fixed Term Plans, Sundaram Capital Protection Oriented Funds, Sundaram Monthly Income Plan, Sundaram, Sundaram Select Debt Short-Term asset Plan, Sundaram Gilt Fund, Sundaram Bond Saver, Sundaram Flexible Fund Flexible Income Plan and Sundaram Corporate Bond Fund

Plans and Options

The scheme offers two plans- Direct and Regular Plan. These plans include 3 options, namely Growth, Dividend, Pay-out & Dividend Sweep. Growth is the default option, in a case where no option is selected by the investor.

It is important to note that, all plans and options available for offer under the scheme will have the same portfolio.

Direct Plan is for investors who purchase /subscribe units into the scheme directly with the fund and not via distributors, agents or any middlemen.

The advantage of subscribing for a direct plan over a regular plan is that the expense ratio of the Direct Plan shall be lower than that of the Regular Plan as it shall exclude distribution expenses, commission, etc.

Regular Plan, on the other hand, is naturally more expensive as it involves expenses for distributors and commissions.

Among the 3 options available to the investors under each plan, growth is common. This option is suitable for those investors who prefer to accumulate their income. At the same time, they do not have a need to receive regular cash flows in the form of dividends to meet specific financial goals.

The dividend option shall be entitled to receive regular dividends. The investors in this option shall be able to receive regular dividends to meet specific financial goals.

The dividend sweep option will be available only when the dividend amount payable to the investor’s account on the record date in a folio is equal to or more than ₹ 500.

The payable dividend to the investor, shall be automatically swept into the Target Scheme (open-ended schemes) on the immediate business day, as opted by the unit-holder/ investor.

The dividend policy says that the dividend, if any, will be distributed at the discretion of the trustee from the available distributable surplus.

Invest in Sundaram Emerging Small Cap – Series IV NFO

If you want to invest in this NFO, the following steps will have to be followed :

  1. Log in to your Groww account, if you are a new user,  sign up first– it is operated online and takes 2-3 working days.
  2. Decide the amount you would like to invest in Sundaram Emerging Small Cap – Series IV NFO.
  3. Email Groww support on with a request or call/Whatsapp on 9108800604.

Additional Details

Investors who for any reason whatsoever, do not receive the allotment of units of this NFO shall be eligible for refund. The entire amount shall be refunded within a period of 5 business days for the closure of the NFO period.

For any reason if the amount is refunded after 5 business days, interest @15% per annum for the delayed period shall be paid by the investment manager.

The following people cannot invest in this scheme-

  1. Citizens of USA/Canada
  2. People residing in any Financial Action Task Force (FATF) declared non-compliant country or territory
  3. People residing in countries which require licensing or registration of Indian Mutual Fund products before selling the same in its jurisdiction.

The Details for the Registrar & Transfer Agent for this NFO is:

Sundaram BNP Paribas Fund Services Limited

SEBI Registration No. INR 000004066

Unit: Sundaram Mutual Fund, Central Processing Center,

23, Cathedral Garden Road, Nungambakkam, Chennal-600034. Tel: 044 – 2830 9100

Website address:


Sundaram Mutual Fund is a reputed fund house with a good track record. There are various funds on offer by this fund house with good returns.

Investing should be based on the objective of the investor. It entails risk on investment and commensurate returns. The decision to invest or not should be based on the risk-return capacity of the investor.

Happy investing!

Disclaimer: the views expressed are of the author and do not reflect those of Groww.