A FUND designed to attract investors who favour smaller Indian companies was launched yesterday by GT Investment. For those already sated by a packed menu of emerging market launches over the past year, the fund managers claim to have found some palatable alternatives. The initial portfolio will include 40 stocks from about 4,000 smaller companies with market capitalisations of less than US$250 million. It will initially invest up to 40 per cent in consumer stocks, with about 15 per cent in infrastructure and export-related sectors. The remainder will be held in Luxembourg-traded global depositary receipts to maintain the fund's liquidity, particularly if there is a rush of redemptions. Stocks chosen will be trading at 10 to 15 times earnings, which compares with 25 to 30 times earnings at which larger companies are being traded in India. James Alexandroff, GT Investment director, said: 'The past three years has seen increased confidence in the Indian market, mainly due to the deregulation of licensing requirements, lifting of limits on foreign direct investment and the opening up of stock markets to foreign investors.' For retail investors the bid offer spread is about four per cent and the annual management charges a comparatively steep two per cent.