Principal Small Cap Fund

Introduction

Principal Small Cap Fund is a mutual fund scheme from Principal Mutual Fund. This fund has been in existence for over 2 yrs, since launched in May 2019. The has Rs. 473 Crores worth of Assets Under Management(AUM) as of September 2021 and is categorized as a small-cap fund.

The fund has invested majorly in Technology, Services, Chemicals, Construction, Financial sectors. The fund’s top 5 holdings are Persistent Systems Ltd, Indian Energy Exchange Ltd, Can Fin Homes Ltd, Kei Industries Ltd, and Dixon Technologies (India) Ltd.

Investment strategy and Benchmark

The Principal Small Cap fund seeks to generate capital appreciation by investing predominantly in equity or equity-related options of small-cap companies. The fund manager will select stocks to build a diversified portfolio that has maximum exposure across all sectors. He aims to identify such strong growth companies and take advantage of their future appreciation. The fund is benchmarked against the NIFTY Small Cap 100 Total Return Index(TRI).

Key information About Principal Small Cap Fund

1. The current Net Asset Value(NAV) of the Principal Small Cap Fund is Rs. 24.39 for the Growth option of its Regular plan and Rs. 25.46 for its Direct plan as of October 2021.

2. The fund currently holds Assets Under Management(AUM) worth Rs. 473 Crores as of September 2021.

3. The expense ratio of the fund is 2.46% for the Regular plan and 0.72% for the Direct plan as of September 2021.

4. The minimum investment required is Rs. 5000, the minimum additional investment is Rs. 1000 and the minimum SIP investment is Rs. 500.

Asset allocation

The fund has invested 94.58% of its assets in Indian stocks, in which 6.24% is in large-cap stocks, 5.72% is in mid-cap stocks, and 67.19% in small-cap stocks. The fund has invested 0.03% in Debt of which 0.03% in Government securities.

Portfolio Of Principal Small Cap Fund

I. No of stocks – 66.
II. Top 10 Stocks – 24.87%.
III. Top 5 Stocks – 13.50%.
IV. Price-Book(P/B) ratio – 3.43.
V. Price-Earnings(P/E) ratio – 22.68.

Top 10 stock holdings

I. Persistent Systems – 3.19%.
II. Indian Energy Exchange – 2.79%.
III. Can Fin Homes – 2.64%.
IV. Kei Industries – 2.50%.
V. Dixon Technologies – 2.38%.
VI. Mold Tek Packaging – 2.35%.
VII. Laurus Labs – 2.35%.
VIII. Mastek – 2.26%.
IX. Cyient – 2.22%.
X. Multi Commodity Exchange of India – 2.19%.

Taxation

1. Gains over Rs. 1 lakh are taxed at a rate of 15% (Short term Capital Gain Tax or STCG) if units are redeemed within 1 year of investment.

2. No tax is to be paid as long as you continue to hold the units.

3. Gains of more than Rs. 1 lakh will be taxed at a rate of 10% (Long term Capital Gain Tax or LTCG). Any cess/surcharge is not included.

4. For units redeemed after 1 year of investment, gains of upto Rs. 1 lakh accruing from those units in a financial year shall be exempted from tax.

Dividends

1. Dividends are added to the income of the investors and taxed according to their respective tax slabs.

2. Further, if an investor’s dividend income exceeds Rs. 5,000 in a financial year, the fund house also deducts a TDS of 10% before distributing the dividend.

Principal Small Cap Fund Regular Plan

Details

I. NAV – Rs. 24.39(as of October 2021).
II. IDCW – Rs. 24.39.
III. Returns – 44.44%(since launch in May 2019).
IV. Benchmark – NIFTY Smallcap 100 TRI.
V. Risk – Very High.
VI. Type – Open-ended (Equity).
VII. Asset Under Management(AUM) – Rs. 473 Crores(as of September 2021).
VIII. Expense ratio – 2.46%(as of September 2021).
IX. Turnover – 36%.

Minimum investment – Rs. 5000.
Minimum additional investment – Rs.1000.
Lock-in period – Not applicable.
Minimum no of cheque – 12.
Minimum withdrawal – Rs. 500.
SIP investment – Rs.500 (Minimum)
Exit load – Nil for the redemption of units upto 24%. But, 1% on redemption over 24% of the limit stated above If, redeemed before 1 year from the date of allotment. Redemption of units would be done on First in First out Basis(FIFO) and Nil thereafter.

Principal Small Cap Fund Direct Plan

Details

I. NAV – Rs. 25.46(as of October 2021).
II. IDCW – Rs. 25.46.
III. Returns – 47.02%(since launch in May 2019).
IV. Benchmark – NIFTY Smallcap 100 TRI.
V. Risk – Very High.
VI. Type – Open-ended (Equity).
VII. Asset Under Management(AUM) – Rs. 473 Crores(as of September 2021).
VIII. Expense ratio – 0.72%(as of September 2021).
IX. Turnover – 36%.

Minimum investment – Rs. 5000.
Minimum additional investment – Rs.1000.
SIP investment – Rs.500 (Minimum).
Minimum no of cheque – 12.
Minimum withdrawal – Rs. 500.
Lock-in period – Not applicable.
Exit load – Nil for the redemption of units upto 24%. But, 1% on redemption over 24% of the limit stated above If, redeemed before 1 year from the date of allotment. Redemption of units would be done on First in First out Basis(FIFO) and Nil thereafter.

Who should invest

Investors looking to invest for 6-7 years or more with the expectation of good gains should consider this fund for investment. This fund invests in small to medium-sized companies. As a result, tends to fall more when stock prices fall compared to large-cap funds that invest in larger companies. Higher returns are expected in the long term but, ups and downs are also along the way.

Fund Manager

Mr. Ravi Gopalakrishnan and Mr. Siddarth Mohta are currently managing the Principal Small Cap Fund. Mr. Ravi Gopalakrishnanan is an MBA from Bradley University, USA, and Masters in Finance(Investments) from Drexel University, USA. Before joining Principal Mutual Fund, he worked with Canara Robeco AMC, PGIM India Mutual Fund, Hudson Fairfax Group, USA, and Sun F&C Asset Management Ltd.

Whereas, Mr. Siddarth Mohta is also an MBA(Financial Risk Management). He Has over 16 years of experience as an Equity Analyst/Finance Manager.

Contact

Principal Asset Management Private Limited.
Address – Exchange Plaza – 2nd Floor – NSE Building, “B” Wing-Bandra Kurla Complex, Bandra (East), Mumbai – 400051
Call – 022 67720555/1800 425 5600
E-mail – [email protected]
Website – www.principalindia.com

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