Tata AIA Small Cap Discovery Fund: What is it and how to invest?

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Tata AIA Small Cap Discovery Fund: Tata AIA Life Insurance (Tata AIA) has launched its first dedicated Small-Cap fund, Tata AIA Small Cap Discovery Fund. In a statement, Tata AIA said 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.

Commenting on the launch of the Small-Cap Discovery Fund, Harshad Patil, Executive Vice President and Chief Investment Officer (CIO) of Tata AIA Life Insurance, said, “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.”

Why small cap?

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. 

Also Read: Problem of plenty for funds as smallcap kitty swells

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.

Tata AIA said small cap stocks offer many  advantages to investors, such as: 

1. Nifty Small Cap 100 trades at a deeper discount on 2-year average PE** (14.7) as compared to Nifty 50 (22.08)- stocks available at lower prices.

2. Nifty Small cap index has given excellent returns over 1 year (14.3%), 3 years (41%), and since inception (13.6%)

3. Tata AIA funds have beaten their benchmarks over multiple time periods. The below table illustrates the returns over 5 years

Fund (5 year returns)Tata AIA Fund ReturnsBenchmark Returns
Tata AIA Multi Cap Fund21.73%12.42%
Tata AIA Top 200 Fund 21.20%12.42%
Tata AIA India Consumption Fund20.35%12.42%
Source: TATA AIA Press Release

4. RBI rate hike cycle has paused, and Inflation is cooling – favourable for small caps by making the availability of funds at cheaper rates.

Tata AIA Small Cap Discovery Fund will primarily invest (up to 65%) 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. 

Also Read: SIP calculator: 5 Small Cap funds turn Rs 5,000 SIP into Rs 22.5 lakh to Rs 35 lakh in 10 years

How to invest

Tata AIA 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. The insurer said 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.”

Disclaimer: Facts and views in the above content are based on a press release issued by Tata AIA and it is intended for informational purposes only. They do not reflect the views of You should not invest in any fund without consulting your financial advisor. 


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