Carnelian Mutual Fund files draft documents for small cap fund

Reports coming in for today mention that Carnelian Mutual Fund has filed draft scheme documents with SEBI for the Carnelian Small Cap Fund, its first active equity mutual fund scheme.

The fund house had recently filed papers for the Carnelian Liquid Fund, its maiden scheme. The Small Cap Fund filing was made on September 16, according to SEBI records.

The proposed scheme will be an open-ended equity fund investing predominantly in small-cap firms. It will be benchmarked against the Nifty SmallCap 250 TRI.

Deepak Malik and Viraj Parekh will manage the fund, according to the draft Scheme Information Document.

The fund will follow a combination of top-down and bottom-up research. It will look for businesses with sustainable competitive advantages, scalable business models, firm management quality, sound corporate governance, healthy balance sheets, and potential for long-term earnings expansion.

Stock selection will consider factors including earnings visibility and cash flows, return ratios and capital allocation, management quality, corporate governance, competitive positioning and valuations.

The scheme can invest across sectors and themes and will seek to maintain a diversified portfolio of small-cap firms. The portfolio can be actively rebalanced based on changes in business fundamentals, valuations, market conditions and liquidity.

The fund will have no lock-in and will offer continuous purchase and redemption after the NFO. Units will be offered at Rs 10 during the NFO.

The Vikas Khemani-backed Carnelian received final SEBI approval to launch its mutual fund business on July 22, 2026. It had earlier received in-principle approval from SEBI on September 19, 2025.