Nippon India Mutual Fund Places More Curbs On Small-Cap Inflows

The Nippon India Mutual Fund has announced measures aimed at limiting fresh inflows into its popular small-cap scheme.

The mutual fund, in a notice, said it was reducing the amount that can be invested via fresh applications of systematic investment plans and systematic transfer plans.

Starting Friday, the scheme will only accept SIPs and STPs with a limit of Rs 50,000 per day per PAN, it said. The scheme, which is the largest in the category with assets under management of over Rs 46,000 crore in February, had already stopped lumpsum investments and had limited fresh inflows through SIPs and STPs to Rs 5 lakh per day per PAN.

“The limit on subscriptions of units has been proposed to facilitate the gradual deployment of corpus in order to align with the nature of small-cap investing,” the mutual fund said in its notice. “The step is warranted considering the recent sharp rally in the small-cap space and increased investor participation through high-ticket investments, which would be in the best interest of existing unit holders and appropriate for incremental investment.”

Nippon India MF has also changed the exit load charged on the scheme. Where earlier an exit load of 1% would be levied if units were sold within one month of the date of allotment, now it will be charged if units are sold within a year of allotment.

The announcement by the mutual fund comes soon after the market regulator, the Securities Exchange Board of India, wrote to the Association of Mutual Funds in India, asking it to take the necessary steps to protect the interests of investors in the small- and mid-cap space. A stress test was then introduced to disclose several parameters, including portfolio liquidity, the first result of which was released on March 15.