ICICI Prudential Suspends Lump Sum Investments Into Its Mid And Small-Cap Funds

ICICI Prudential Asset Management Co. has suspended fresh investments through the lump sum mode into its mid- and small-cap funds, effective March 14.

Further, switching into the mid- and small-cap schemes from other schemes of the ICICI Prudential Mutual Fund will also be suspended.

The move to temporarily discontinue subscriptions is undertaken to protect investors from sudden market movements, the AMC clarified in a statement on Tuesday. No transactions shall be accepted post-cut-off timings of March 13, 2024, it said.

However, fresh registrations through a systematic investment plan or systematic transfer plan shall be continued with a limit of Rs 2 lakh, it said.

Special features like the Freedom SIP, SIP top-up facility, Booster SIP, flex STP, Booster STP, capital appreciation STP, etc., will not be available for fresh SIPs/STPs registered in the schemes. These restrictions will not affect SIPs or STPs or such other special products registered prior to the effective date, the statement said.

"The AMC may accept lump sum subscriptions from investors in the schemes at a future date and fresh approval shall be sought from the Board of Trustee in this regard at that time," the AMC said.

The Securities and Exchange Board of India has informed mutual funds to proactively protect investor interest amid "froth" building up in the broader end of the Indian equity market. Amidst this, the market regulator has asked AMCs to be cautious and consider moderating flows and rebalancing portfolios.

Last year, Nippon AMC and Tata MF stopped lumpsum inflows into their respective small-cap schemes on the back of unprecedented inflows into small-cap schemes in particular.

The mid- and small-cap category schemes have witnessed huge inflows recently. Just this financial year till January, actively managed small-cap mutual fund schemes have received inflows of Rs 37,360 crore, and mid-cap schemes have received Rs 19,400 crore, according to data released by AMFI on an ongoing basis.

Asset management companies will have to disclose the results of the stress test for small and mid-cap schemes by March 15 for the preceding month. AMCs are required to disclose the results on their respective websites, as well as on AMFI’s website, on a monthly basis within 15 days after each month, starting with disclosure for the month of February 2024 by March 15.

Since the cautious stance by the market regulator, the mid- and small-cap stocks that were seeing huge gains took a breather. In March, the Nifty Midcap 100 index fell by 1.44%, while the Nifty Smallcap 100 index fell over 6%. Meanwhile, in the last 10 months, the mid-cap and small-cap index have risen by 59.7% and 65.5%, respectively.