DSP Merrill rolls out mid-cap fund

Two-and-a-half years after the launch of its The Infrastructure Growth and Economic Reforms Fund, DSP Merrill Lynch Fund Managers today launched an open-ended small and mid-cap fund, which aims to mop up around Rs 900-1,000 crore.

The new fund offer (NFO) will invest into firms below market capitalisation of Rs 4,500 crore, officials said here today.

The fund house has researched 15-70 light-weight stocks, where it would be investing around 75-80 per cent of its funds. Remaining funds will be invested in other investment instruments including large caps stocks.

"Middle level stocks, with market capitalisation more than Rs 1,800 crore and less than Rs 4,500 crore will form around 60-65 per cent of overall investment, while around 15-20 per cent will be invested in small caps," S Nagnath, president and chief investment officer, DSP Merrill Lynch Fund Manager told reporters here.

DSP Merrill Lynch senior vice-president Soumendra Nath Lahiri will be the fund manger for new scheme.

The fund house in its market research observed that over last five years, both the frontline indices, S&P CNX NIFTY and BSE-30 Sensex, registered gains of 26.49 per cent and 29.2 per cent. In comparison, CNX Mid Cap grew by about 43 per cent.

"The mid and small cap firms have stable growth rate. Sectors such as agri-based industries, auto ancillaries are doing good. More sectors will become attractive as economy is progressing at a smart pace," Nagnath said.

About the current stock market scene, he said: "We expect that the market will soon touch its all-time high, as external factors including FIIs and cooling down of crude is benefiting the index movement."

DSP Merrill Lynch Small and Mid Cap Fund will be benchmarked against the CNX Mid Cap Index. The fund offer opens on September 29 and closes on October 2006.