~ Policyholders to benefit from long-term capital appreciation through small-cap stocks ~

Mumbai, 10 July 2023: Tata AIA Life Insurance (Tata AIA), one of India’s leading life insurers, has launched its first dedicated Small-Cap fund, Tata AIA Small Cap Discovery Fund. The New Fund will offer policyholders the opportunity to generate capital appreciation in the long-term by investing in small-cap market capitalisation stocks. The New Fund Offering (NFO) window will remain open from July 10 to July 24, 2023, at Rs. 10 per unit, applicable only during the NFO period.

Commenting on the launch of the Small-Cap Discovery Fund, Mr. Harshad Patil, Executive Vice President and Chief Investment Officer (CIO) of Tata AIA Life Insurance, said, “The Government is focused on formalising the economy during the Amrit Kaal, which will benefit small businesses immensely. Further, growth in consumption demand, rising disposable income, and support for manufacturing will catalyse several smaller companies to become dominant in their sectors. Given these forces, the Tata AIA Small-Cap Discovery Fund offers our policyholders a great opportunity to maximise their investment by spotting such opportunities early and investing in them over the medium to long term.”

Small-cap stocks are a significant part of the Indian equity market, with more than 4500 companies. Among these, approximately 500 stocks have a market cap higher than Rs.2000 crore. That is why, compared to the large-cap and mid-cap categories, the small-cap category presents a large universe of stocks for investment. However, many of them are also prone to a high degree of volatility as their performance can be impacted by changing market dynamics. Therefore, one needs to have a longer investment horizon to enjoy the returns from this fund.

Small cap stocks offer several advantages to investors:

1. Nifty Small Cap 100 trades at a deeper discount on 2-year average PE** (14.7) as compared to Nifty 50 (22.08)- stocks available at lower prices.

2. Nifty Small cap index has given excellent returns over 1 year (14.3%), 3 years (41%), and since inception (13.6%)

3. Tata AIA funds have beaten their benchmarks over multiple time periods. The below table illustrates the returns over 5 years

Fund (5 year returns) Tata AIA Fund Returns Benchmark Returns
Tata AIA Multi Cap Fund 21.73% 12.42%
Tata AIA Top 200 Fund 21.20% 12.42%
Tata AIA India Consumption Fund 20.35% 12.42%

4. RBI rate hike cycle has paused, and Inflation is cooling – favourable for small caps by making the availability of funds at cheaper rates.

Tata AIA Small Cap Discovery Fund will primarily invest (up to 65%) in handpicked small-cap companies offering opportunities for long-term wealth creation. The fund provides investors with an opportunity to invest in quality businesses that are small but have the potential to grow into mid and large-cap companies.

Tata AIA policyholders can invest in this fund through the Company’s ULIP offerings, Fortune Pro, Wealth Pro, Fortune Maxima, Wealth Maxima, i Systematic Insurance Plan and Smart Sampoorna Raksha Plus. In addition, this Fund will also be attached to Tata AIA’s Param Rakshak Solutions. This offers consumers the unique opportunity to benefit from the long-term growth potential of equity while securing their loved ones with the protection of a life insurance cover.

Tata AIA has a well-defined research process and methodology and takes a long-term view based on fundamental research. As on 31st May 2023, the Company’s total Asset Under Management (AUM) grew by 30% – increasing to INR 75,192 Cr from INR 57,927 Cr.

99.10% of the rated AUM of Tata AIA Life is rated either 4 star or 5 star on a 5-year basis as of March 31st, 2023, by Morningstar Ratings*. Out of the 11 funds available for new business, 7 are rated 5 star, and 4 are rated 4 star as of March 31st, 2023, on a 5-year basis.7 funds rated 5 star are Whole Life Aggressive Fund, India Consumption Fund, Multicap Fund, Whole Life Stable Fund, Large Cap Equity Fund, Whole Life Income Fund and Top 200 Fund. 4 funds rated 4 star are Top 50 Fund, Whole Life Short Term Fixed Income Fund, Whole Life Midcap Fund and Super Select Equity Fund.