Bajaj Finserv launches Small Cap Fund - Direct (G) NFO

The Bajaj Finserv Small Cap Fund is a new open-ended equity scheme focused on long-term capital appreciation by investing in small-cap companies. It aims to identify companies with strong growth potential and good fundamentals, potentially offering high returns, but also comes with higher risk due to the nature of small-cap investments. The fund is guided by principles of growth, quality, and value, seeking to cut through market noise to identify promising companies.

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Key Features of Bajaj Finserv Small Cap Fund

Opening Date: June 27, 2025
Closing Date: July 11, 2025
Exit Load: -Nil-
Minimum Investment: ₹500
Benchmark Index: Nifty Smallcap 250 - TRI

Objective of the Bajaj Finserv Small Cap Fund

The objective of Bajaj Finserv Small Cap Fund - Direct (G) is to generate long-term capital appreciation by investing in equity and equity-related securities of small-cap companies.

However, there is no assurance that the investment objective of the Scheme will be achieved.

Investment Strategy of Bajaj Finserv Small Cap Fund

The Bajaj Finserv Small Cap Fund focuses on long-term capital appreciation by investing primarily in equity and equity-related securities of small-cap companies. The fund aims to achieve this by maintaining a portfolio with 65-100% investment in small-cap stocks, with the remaining portion allocated to large and mid-cap companies and debt instruments. In essence, the Bajaj Finserv Small Cap Fund seeks to identify and invest in promising small-cap companies with strong growth potential, while also managing risk through diversification and a focus on quality businesses.

Risks Associated with Bajaj Finserv Small Cap Fund

• High Volatility: Small-cap companies are more sensitive to market changes and economic conditions, leading to greater price swings in their stocks and, consequently, in the fund's performance. 
• Limited Liquidity: Smaller companies may have lower trading volumes, making it more difficult to buy or sell shares quickly, especially during market downturns. 
• Uncertain Performance: Smaller companies are often less established and may have unproven business models, making their future performance more difficult to predict. 
• Potential for Losses: While small-cap funds can offer high returns, they also carry a greater risk of significant losses, especially in the short to medium term. 
• Sensitivity to Economic Downturns: Small-cap companies can be more vulnerable to economic slowdowns or recessions, which can negatively impact their profitability and stock prices.

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Risk Mitigation Strategy by Bajaj Finserv Small Cap Fund

The Bajaj Finserv Small Cap Fund employs a multi-pronged risk mitigation strategy that includes diversification, a focus on fundamentally strong companies, and a flexible approach to investment allocation. The fund aims to manage risk by diversifying across various sectors and industries within the small-cap space. Additionally, it may opportunistically invest in large-cap and mid-cap stocks to enhance returns while staying within regulatory limits.

What Type of Investor Should Invest in the Bajaj Finserv Small Cap Fund?

• Long-term Perspective: The fund is designed for investors seeking long-term capital appreciation and are comfortable with the higher risk associated with small-cap investments. 
• Bottom-up Approach: The fund's managers likely analyse individual companies rather than focusing on broad market trends, aiming to identify those with strong fundamentals and growth prospects. 
• Risk Management: While prioritising growth, the fund also considers risk management by diversifying within the small-cap segment and potentially including investments in larger companies to mitigate overall portfolio volatility.