Nippon India Mutual Fund announced a temporary halt on fresh lump sum investments in its Nippon India Small Cap Fund, starting today, July 7, 2023.
“Fresh or additional subscriptions or switch-ins will not be allowed till further notice, from the effective date,” the fund house said.
Due to the recent sharp rally in the small-cap space and increased investor participation through large investments, Nippon India Mutual Fund will temporarily suspend fresh lump sum investments in Nippon India Small Cap Fund. The decision would be in the best interest of existing unitholders and is suitable for incremental investments, the fund house said.
Existing systematic investment plans (SIPs) and systematic transfer plans (STPs) will not be affected by this restriction. The fund house also clarified in a corrigendum that fresh registrations through SIPs, STPs, or other special products will continue with a limit of Rs. 5 lakh per day per Permanent Account Number (PAN).
“The limit on the subscription of units of the scheme is being proposed to facilitate the gradual deployment of the corpus in order to align with the nature of small-cap investing,” Nippon India Mutual Fund said in a statement.
Rally In Small-Cap Space
Nippon India Mutual Fund has cited the rally in the small-cap space as the reason for halting lump sum investments in Nippon India Small Cap Fund.
Among the 23 small-cap mutual funds that gave an average return of 33.20 per cent in the last one year, nine of them outperformed the category average. A total of five funds gave returns above 40 per cent. The three-year average returns of the category was a whopping 41.60 per cent.
Small-cap mutual funds have demonstrated impressive returns over the past one and three years.
The Association of Mutual Funds in India (Amfi) data shows 23 funds in this category with an average return of 33.20 per cent in the one-year period ending on July 4, 2023.
The outstanding performance has attracted a surge of investors to this category, seeking potential growth opportunities. The Nippon India Small Cap Fund is one of the top performers, with one-year returns at 41.47 per cent, making it one of the top performers in the category.
Nippon India’s decision follows a similar move by Tata Mutual Fund, which had discontinued lump sum investments in its small-cap fund starting from July 1, 2023.
