Our Bureau

Chennai , Jan. 6

SUNDARAM Mutual has launched an open-ended equity fund, which will predominantly invest in small and mid-cap stocks.

Only a small part of the Sundaram Small and Medium Indian Leading Equities' (SMILE) fund will be invested in large cap stocks to ensure liquidity.

At a press conference here, Mr Sanjay Santhanam, Vice-President, Marketing & Sales, Sundaram Asset Management Company Ltd, observed that there was a lot of potential in small and mid-cap companies.

To illustrate this, he said that 188 companies with a market capitalisation of less than Rs 200 crore had turned in over 50 per cent (compounded) growth in their profits.

Similarly, 258 companies had seen their profits grow more than 24 per cent in the last five years.

In the last seven years, profits of 160 companies grew over 18 per cent.

Mr Santhanam said that liquidity was also not an issue while investing in small and mid-caps. He said that the total market capitalisation of the 160 companies was about Rs 7,500 crore.

Even if two-thirds of the equity holding could be assumed to be with the promoters (and therefore not available for trading), the other one-third — or Rs 2,500 crore — was the floating stock available.

The company expects the SMILE fund to collect Rs 200 crore through the initial public offer.

Asked if the stock market was FII-driven, Mr Anoop Bhaskar, Fund Manager-Equity, observed that, "money seeks returns."

Therefore, as long as Indian equities continue to be attractive, FIIs will stay invested in India. As the Indian economy is doing very well, Indian companies will be attractive, he said.

Adding to that point, Mr T. P. Raman, Managing Director, Sundaram Asset Management Company, said that Indian fund houses now had much more muscle than earlier to act as a bulwark against any fall in the market because of an FII pullout.

"For example, two years ago we, as a fund house, had about Rs 40 crore in equities. Today, we have about Rs 750 crore," he said.

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