SBI MF to pause lump sum investments into Small Cap Fund starting today

NEW DELHI:  Asset management firm SBI Mutual Fund has announced that it will no longer accept lump sum investments into its Small Cap Fund from September 7. The move come around five months after the fund was reopened on March 30. 

However, the company’s officials said that the fund’s size has gone past Rs 5,000 crore and pointed out that small-cap companies have started facing capacity constraints even as the market has run up.  The fund has also limited new systematic investment plans (SIP) of up to Rs 5,000 per investor, even though existing SIPs registered before 8 September will continue.

The Nifty Smallcap 100 index has soared by nearly 40 per cent over the three months ended August and with the firm’s total Assets Under Management (AUM) breaching the Rs 5,000 crore mark, analysts say that the decision is a prudent one.  

According to D P Singh, chief business officer, SBI Mutual Fund, the company’s decision is to ensure that existing investors don’t suffer due to capacity constraints. This is the second such halt for the fund. It had initially been closed in 2015, a move not reversed until this summer. In 2015, the action was taken since the fund had alreadu hit its maximum capacity constraint of Rs 750 crore as specified in its own offer document. 

Other funds haven’t seen as much cash inflow

While other small cap funds from DSP and had also opened up lump sum investment in April this year, they have not seen the same level as fund inflows as SBI MF.

Nippon India Small Cap Fund’s AUM has shrunk from Rs 8,567 crore to Rs 8,322 crore from the end of February to July. DSP’s fell from Rs 5,045 crore to Rs 4,650 crore.