WhiteOak Capital Mutual Fund has launched its WhiteOak Capital Diversified Equity Small Cap Active FOF scheme, marking the fund house's entry into the fund-of-funds space. According to the latest reports, the scheme is an open-ended fund of funds that will invest 95% to 100% of total assets in units of equity-oriented small-cap mutual fund schemes, with the remaining 0% to 5% allocated to debt and money market instruments, government securities, T-Bills and TREPS. The scheme is classified as an Equity Oriented FOF (Domestic) – Diversified FOF and aims to generate long-term capital appreciation by investing in units of equity-oriented small-cap mutual fund schemes.
The scheme will employ a dynamic allocation approach across selected underlying small-cap schemes based on multiple factors including relative valuations within the small-cap segment, market cycle and liquidity conditions, fund manager track record and investment process, portfolio diversification and overlap analysis, risk-return characteristics of underlying schemes, sectoral opportunities and earnings outlook, and macroeconomic and regulatory developments. The FOF may adopt a staggered deployment strategy and periodic portfolio rebalancing to manage market volatility and optimize long-term risk-adjusted returns. The underlying funds can have different investment styles, methods of building portfolios and approaches to selecting stocks, with allocation between underlying schemes changing based on these factors.
The scheme is benchmarked against the Nifty Smallcap 250 TRI and its units are not proposed to be listed on a stock exchange. The NFO price is ₹10 per unit with a minimum investment of ₹500 during the NFO period and ₹100 during the ongoing offer period. Subscriptions and redemptions will be available at NAV-related prices on every Business Day after the NFO period. There is no entry load, while a 1% exit load applies when units are redeemed or switched out within one year. The estimated investment management and advisory fee is up to 2.10% of daily net assets.
The FOF will be managed by Ashish Agrawal, who has over 18 years of experience in financial markets and currently manages 18 schemes of WhiteOak Capital Mutual Fund. Bhavin Patadia and Nikunj Sampat are other fund managers, with Patadia having over 17 years of experience and currently managing WhiteOak Capital Arbitrage Fund and WhiteOak Capital Equity Savings Fund, while Sampat has over 15 years of experience. This marks WhiteOak Capital's first fund-of-funds scheme, with the company not currently having another FoF scheme in its portfolio.
CEO Ashish P Sommaiyaa explained that the small-cap FOF will likely never be the top-performer in the small-cap fund category but will not be the worst-performer either. He stated that the scheme will probably land in the second quartile at most times and will have lower volatility of alpha compared to any individual fund. The scheme may be a tax-efficient option as investors would not have to redeem from one small-cap fund to invest in another. However, investors will have to bear recurring expenses of the fund-of-funds scheme in addition to expenses of the underlying schemes, and the scheme's performance will depend on the performance of the underlying schemes. The document also highlights volatility and liquidity risks associated with small-cap investments, with the scheme subject to market risks as investments in the securities market are subject to market fluctuations.
