Tata AIA Life Insurance Launches Small Cap Discovery Fund

Tata AIA Life Insurance (Tata AIA) has launched its first dedicated Small-Cap fund - Tata AIA Small Cap Discovery Fund.

"The New Fund will offer policyholders the opportunity to generate capital appreciation in the long-term by investing in small-cap market capitalisation stocks. The New Fund Offering (NFO) window will remain open from July 10 to July 24, 2023, at Rs. 10 per unit, applicable only during the NFO period", said the company.

Harshad Patil, Executive Vice President and Chief Investment Officer (CIO) of Tata AIA Life Insurance said, “The Government is focused on formalising the economy during the Amrit Kaal, which will benefit small businesses immensely. Further, growth in consumption demand, rising disposable income, and support for manufacturing will catalyse several smaller companies to become dominant in their sectors. Given these forces, the Tata AIA Small-Cap Discovery Fund offers our policyholders a great opportunity to maximise their investment by spotting such opportunities early and investing in them over the medium to long term.”

Small-cap stocks are a significant part of the Indian equity market, with more than 4500 companies. Among these, approximately 500 stocks have a market cap higher than Rs.2000 crore. That is why, compared to the large-cap and mid-cap categories, the small-cap category presents a large universe of stocks for investment. However, many of them are also prone to a high degree of volatility as their performance can be impacted by changing market dynamics. Therefore, one needs to have a longer investment horizon to enjoy the returns from this fund.

According to recent data, the Nifty Small Cap 100 index has demonstrated a significant trading advantage by maintaining a deeper discount on its 2-year average PE ratio, standing at 14.7, in comparison to the Nifty 50 index which stands at 22.08. This discrepancy implies that small-cap stocks are available at lower prices, presenting an appealing opportunity for investors looking to maximize their returns.

According to the company's statement, Tata AIA Small Cap Discovery Fund will primarily invest (up to 65 per cent) in handpicked small-cap companies offering opportunities for long-term wealth creation. The fund provides investors with an opportunity to invest in quality businesses that are small but have the potential to grow into mid and large-cap companies.

Company's policyholders can invest in this fund through the Company’s ULIP offerings, Fortune Pro, Wealth Pro, Fortune Maxima, Wealth Maxima, i Systematic Insurance Plan and Smart Sampoorna Raksha Plus. In addition, this Fund will also be attached to Tata AIA’s Param Rakshak Solutions. This offers consumers the unique opportunity to benefit from the long-term growth potential of equity while securing their loved ones with the protection of a life insurance cover.