Spotting Big Opportunities in Small Cap Stocks: TRUSTMF Small Cap Fund

If you’re looking for an opportunity to diversify your investment portfolio with high-growth potential, small-cap companies offer a compelling case. TRUSTMF Small Cap Fund is launching a New Fund Offer (NFO) from 11th to 25th October 2024, providing an opportunity to tap into the promising world of small-cap stocks. With a clear focus on growth, the fund aims to generate long-term capital appreciation by investing in small-cap companies—businesses that are often under-researched yet packed with potential.

Why Small Cap Companies?

Small-cap companies are at an exciting stage of their lifecycle. Often these companies are in their highest growth phase, giving investors the chance to participate in their expansion journey. As the fund name suggests, the TRUSTMF Small Cap Fund will primarily invest in these smaller, high-potential companies, providing a unique opportunity for wealth creation.

The small-cap segment offers an extensive and growing investible universe, representing a wide array of sectors not commonly available in large-cap stocks. These include emerging sectors such as capital markets, hospitality, capital goods, realty, specialty chemicals, and auto components. What sets small caps apart is their ability to become multibaggers—companies that deliver returns of at least 100%. The track record is evident: from June 2019 to August 2024, 60 small-cap stocks delivered returns of 5x or more, dwarfing the performance of both large and mid-cap stocks.

Historical Performance: Small Caps Outshine Large Caps

When looking at past performance, the small-cap universe has significantly outperformed large-cap stocks. For instance, the Nifty Small Cap 250 TRI index has grown 5.3 times as compared to 3.9 times for the Nifty 100 TRI index over the same period (as of August 2024). This performance highlights the long-term wealth creation potential within the small-cap space.

Furthermore, small-cap stocks continue to dominate the list of multibaggers, offering significant upside potential for long-term investors who are willing to ride out market fluctuations.

TRUSTMF’s Differentiated Investment Approach

TRUSTMF Small Cap Fund employs a unique investment strategy focused on growth with reasonable valuations (GARV) and Terminal Value (TV) Investing. The GARV approach helps identify stocks that are growing but still reasonably priced, while the Terminal Value investing strategy ensures that investors capture the full value creation journey by staying invested in high-growth stocks over the long term.

Terminal Value, as an investing philosophy, involves understanding the future potential of a company beyond its immediate growth phase. TRUSTMF’s approach takes into account the company’s leadership, intangible assets, and larger megatrends, allowing the fund to capture outsized opportunities and maximize returns for investors.

Key Fund Details

The fund will be managed by seasoned professionals, Mr. Mihir Vora and Mr. Aakash Manghani, who bring years of expertise in equity investing. The scheme follows the Nifty Small Cap 250 TRI as its benchmark. Investors can choose between two plans: Regular and Direct, both of which offer Growth and IDCW (Income Distribution cum Capital Withdrawal) options.

One aspect to consider is the load structure. There is an exit load of 1% if units are redeemed or switched out within 180 days of allotment, with no exit load thereafter.

Suitability and Risk

Given the nature of small-cap stocks, this fund is classified as a “very high risk” investment. It is best suited for investors who have a long-term horizon and are comfortable with the volatility associated with small-cap companies. Investors seeking to capitalize on high-growth sectors and themes that are not available in large-cap companies will find this fund appealing.

Final Thoughts

Small-cap stocks offer significant growth potential for those willing to navigate the associated risks. TRUSTMF Small Cap Fund presents an exciting opportunity for investors looking to achieve long-term capital appreciation through exposure to high-growth, under-researched companies. Before investing, however, it's essential to consult your financial advisor to ensure the fund aligns with your financial goals and risk tolerance.

This NFO offers a gateway to potentially large returns—don't miss out!

Don't miss the opportunity to invest in TRUSTMF Small Cap Fund's NFO, open from 11th to 25th October 2024. Tap into high-growth small-cap companies with long-term wealth creation potential. Ideal for investors seeking capital appreciation in emerging sectors. Consult your financial advisor and invest today!