Mumbai : Reliance Mutual Fund (RMF), a part of Anil Ambani-led Reliance Capital, on Aug 25 launched its first small cap fund here.

The fund proposes to invest at least 65 percent of the corpus in equity and equity-related instruments of small cap companies which may go up to 100 percent of the corpus. "We feel that select small caps are potential large caps of tomorrow because of their benefit of high growth prospects. Valuation gap is also visible between small caps and large caps thus giving an opportunity for alpha creation," said Sunil Singhania, deputy head, equities, RMF, and the fund manager.

The minimum investment amount is Rs 5,000 and in multiples of Re1 thereafter. This fund will offer an auto switch facility from Reliance Liquid Fund - Treasury Plan to Reliance Small Cap Fund during the New Fund Offer (NFO). The NFO would be open from August 26 to September 09, 2010.

Investment in equity and equity-related instruments of any other companies, including derivatives, other than small cap companies will be in the range of 0-35 percent. The scheme has both growth and dividend option. Dividend option offers payout and reinvestment facility. Reliance Small Cap Fund's performance would be benchmarked against BSE Small Cap Index.

"We at RMF have always been very selective in launching new products and focused on products that offer unique proposition to our investors. Our in-depth research capabilities coupled with stock picking abilities have, over the years, offered superior returns to our investors," said Sundeep Sikka, chief executive officer, Reliance Capital Asset Management.