Capitalising on the strong market sentiment, Chola Mutual Fund has launched an open-ended equity scheme Chola Multi-Cap Fund and targets to raise Rs 75 crore (Rs 750 mn) through the initial public offering.

Chola Multi-Cap Fund IPO, which is open for subscription from December 14, 2004 to January 10, 2005, would invest in equity and equity-related instruments across all ranges of market capitalisation, Chola chief executive Sashi Krishnan told reporters in New Delhi.

"We had launched Chola Mid-Cap fund in August. The fund was very good but the market sentiment was not. This time we are launching the multi-cap fund when both factors are strong to benefit the investors," Krishnan said.

The exposure to large cap will be maintained between 25-75 per cent and the mid cap exposure between 25-75 per cent while exposure to small cap stocks would not exceed 15 per cent, he said.

Through the multi-cap fund, the mutual fund will be able to provide investors with added diversification, allowing tactical shifts across market caps depending on the conditions, he added. The scheme would have both cumulative and dividend options.

Krishnan said the scheme would target retail and individual investors and expects to garner Rs 75 crore (Rs 750 million) through the public offer.

The performance of the diversified funds has been far better with investors getting 14 times return compared to five times return from the sensex boom, he said.

Profits of Indian corporates will be higher in the next few years resulting in superior returns from equities, he said.