The Nippon India Mutual Fund will only accept SIPs and STPs with a limit of Rs 50,000 per day per PAN with an aim to limit fresh inflows into its popular small-cap scheme. India’s biggest small cap scheme with assets under management of over Rs 46,000 crore in February has already stopped lumpsum investments and had limited fresh inflows through SIPs and STPs to Rs 5 lakh per day.
The tenure for the exit load has also been changed from one month to one year.
“The step is warranted considering the recent sharp rally in the smallcap space and increased investor participation through high-ticket investments, which would be in the best interest of existing unit holders and appropriate for incremental investments,” the fund house said in a notice.
The restrictions, however, will not affect SIPs, STPs or other such special products registered before the effective date and the unitholders under the dividend reinvestment option. Nippon is the not the only fund house limiting small-cap focussed schemes.
Kotak Mahindra Mutual Fund, SBI MF, Tata Mutual Fund have also put up curbs in the category. In the first round of the mutual fund stress test, Nippon India Mutual Fund said that it would take 27 days to sell off half of the portfolio of its smallcap fund.
The small- and mid-cap meltdown has so far shaved off 2-5 per cent of investors’ wealth in mutual fund schemes. Small-cap stocks have been under pressure ever since Sebi flagged froth in the space. As many as 3,018 second-rung stocks eroded investors’ wealth in March amid the ongoing correction in broader markets.