Samco Mutual Fund has launched a new fund offer (NFO) for its scheme ELSS Tax Saver Fund. The scheme opened on November 15 and will remain open till December 16.
The mutual fund scheme will invest anywhere between 80-100 percent in equity while the remaining 0-20 percent in debt.
The benchmark index is Nifty 500 index TRI. The minimum application amount is ₹500 and in multiples of ₹500 thereafter.
The scheme will aim to create a unique portfolio with a focus on mid cap and small caps. Nearly 70 percent of the current total holdings of all ELSS schemes are in just large cap businesses while the exposure to mid-cap and small caps is significantly lower.
This is why, Samco intends to invest in mid and small cap to create a unique portfolio to generate higher risk-adjusted returns.
Portfolio composition
The fund house aims to build a portfolio of 35 stocks with a predominant exposure to mid-caps and small caps. Within the portfolio, majority will be midcaps and small cap businesses.
About portfolio, the fund house says there will be 35 diversified stocks without any geographic concentration. Since they will primarily be mid cap and small cap, they will have lower liquidity and higher price volatility. Also, there will be a higher business risks since there will be a higher probability of a mid-cap player turning into a small cap than turning into a large cap player.
Thanks to a small investible universe, a lot of sectors and themes may not form a part of the scheme's portfolio.
These may include cyclical and commoditized businesses, short term investment fads relying on the greater fool theory, capital intensive sectors like power, etc.
One of the key reasons why they might avoid these are due to the 50/80 rule. The rule implies that there is a 50 percent chance that stock prices of these companies will fall by 80 percent and there is an 80 percent chance that stock prices will fall 50 percent.
Samco ELSS Tax Saver NFO
| NFO Period | Nov 15 - Dec 16 |
| Portfolio | 80-100 percent in equity, remaining in debt |
| Focus | Mainly mid-cap and small cap stocks |
| Benchmark | Nifty 500 index TRI |
| Application | Minimum amount of ₹500 |
The fund house shares a slew of advantages of investing in this tax saver fund. “There are differentiated product offering with higher potential to generate alpha due to predominantly midcap and small cap portfolio,” the scheme document states.
The higher risks and volatility can be efficiently managed due to a 3-year lock-in. Also, it enables investors to seek tax deduction under section 80C of Income Tax 1961.
