DSP BlackRock Investment Managers Pvt Ltd has announced that it has decided to temporarily suspend all fresh transactions in DSP BlackRock Micro Cap Fund, an open ended diversified equity growth scheme with effect from February 20, 2017, as there is a possibility that large inflows into the scheme may prove detrimental to the interest of the existing unit holders. These transactions include all subscription/switch-in application(s) and/or registration of new Systematic Investment Plan (‘SIP’), Systematic Transfer Plan (‘STP’), Dividend Transfer Plan (‘DTP’) in the scheme, the AMC said in a press release. The scheme will continue to allot units for subscription transactions pertaining to SIP, STP, DTP, Super SIP facilities registered before February 20, 2017.
Any subscriptions/switch-in/SIP/STP/DTP applications received post the cut-off timing of February 17, 2017 would not be accepted. The aforesaid suspension will continue till further notice.
DSP BlackRock Micro Cap Fund’s AUM as on January 31, 2017 was close to Rs 4,780 crore, making it among the largest funds in this category.
Vinit Sambre, Senior Vice President and Fund Manager, DSP BlackRock said in the note, “While we continue to find interesting investment opportunities for the fund to invest in, its current size poses the bigger challenge of liquidity. It is challenging to incrementally build positions, i.e. to increase stock weightage of companies to a meaningful size in the portfolio.”
On the AMC’s decision, Himanshu Srivastava, Senior Analyst Manager Research, Morningstar Investment Adviser India, said, “Over the last three years, the fund has witnessed phenomenal increase in its asset base. In August 2013, just before the start of the small/mid-cap rally in the Indian equity market, the fund’s size was Rs 307 crores, which over a period of next three years swelled to Rs 4,323 crores (as of December 2016), a jump of an astounding 1,308 per cent in absolute terms. However, during the course of time, the fund house has restricted inflows into the fund twice. First time in September 2014, it had put a restriction of Rs 2 lakh for daily lump sum subscription and reduced it further to Rs 1 lakh in August 2016.
“Bigger and growing fund size, particularly for a small/mid-cap fund, can pose challenges to the fund in the form of market-impact cost and opportunity cost. Given the run up in the small/mid-cap space, it has become increasingly difficult for the manager to find investment worthy stocks available within his investment universe and which also passes the muster on his stringent stock selection parameters...Due credit should also go to the fund house for taking this decision which in our view is an investor friendly move. At Morningstar we believe that DSP BlackRock Investment Managers is one of the best asset managers in the country and they have proven us right once again.”