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

financialexpress.com:

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.”

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