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Business News/ Mutual Funds / Kotak Mutual Fund restricts flows into small cap scheme from March 4. Details here
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Kotak Mutual Fund restricts flows into small cap scheme from March 4. Details here

Investors are now permitted to invest over ₹2 lakh into small cap fund in a month via lumpsum, and more than ₹25,000 through systematic investment plan (SIP).

The curbs are a result of sharp run in stock prices, forthcoming elections around the world, and limited supply of new small cap firms in the listed space.Premium
The curbs are a result of sharp run in stock prices, forthcoming elections around the world, and limited supply of new small cap firms in the listed space.

After Nippon and Tata, Kotak Mutual Fund has announced restrictions of investing into small cap scheme from March 4 onwards. 

The latest restrictions mean investors will not be allowed to invest more than 2 lakh into the small cap fund in one month via lumpsum and 25,000 via SIP. Kotak Small Cap fund has total AUM (assets under management) of 14,290 crore, shows the latest AMFI data. 

The move was a result of sharp run in stock prices, upcoming elections across the globe, and limited supply of new small cap firms in the listed space.

In a letter to investors dated February 26, the fund house announced that investors can now put a maximum of 200,000 as lumpsum each month and 25,000 per month through the SIP route. 

ALSO READ: Small Caps: Pockets of opportunity or minefiled on the equity bourses?

“Retail investors’ ownership of the smallcap segment has become sizable, crossing even institutional ownership in many stocks. Instit­utional investors, like mutual funds, exercise broad controls and invest in a disciplined manner. However, momentum chasing by investors, coupled with limited free float available in the market, has created valuation distortions in a few cases. Such experience is further boosting investors’ confidence, over-shadowing the caution required," reads the letter.

ALSO READ: Why should large caps be part of your investment portfolio? Experts answer

Similar curbs in past

Tata Mutual Fund stopped accepting lumpsum amounts and switched investments in Tata small Cap Fund with effect from July 1, 2023. However, the fund house continued accepting investments through SIPs (systematic investment plans) and STPs (systematic transfer plans).

Following Tata, Nippon India Mutual Fund also stopped accepting lumps sum flows into Nippon India Small Cap Fund from July 7 last year. 

The latest curbs to be imposed by Kotak will come into force from March 4, 2024.

 

 

 

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Published: 27 Feb 2024, 04:13 PM IST
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