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In February this year, Parag Parikh or PPFAS Mutual Fund put a halt on fresh inflows into its very popular flexi cap fund. This was after the Securities and Exchange Board of India (Sebi) advised MFs investing in overseas securities to stop these investments so as to not breach the existing industry-wide overseas investment limit of $7 billion.
However, in an unexpected move, the fund house decided to restart fresh inflows into its flexi cap fund (invests up to 35% of corpus in foreign stocks) from 15 March. This came about even as the overseas investment limit for the mutual fund industry remained unchanged.
Investors went into a tizzy if we go by the reaction on Twitter.
Rajeev Thakkar, chief investment officer, PPFAS Mutual Fund told Mint that the fund house initially decided to stop fresh inflows into the flexi cap scheme to maintain status quo and figure out what needed to be done following the halt on investing in foreign stocks. The expectation was that the limit would be hiked sooner rather than later and investors could invest in the fund house’s tax saver fund in the meanwhile. But, feedback from distributors suggested that the three-year lock-in in the tax saver fund seemed to be a deal-breaker for many investors. The option of launching a new scheme altogether too was considered and swiftly rejected given the fund house’s aversion to cluttering the space with multiple schemes. That’s when the fund house decided to re-start inflows into the flexi cap fund – even though this meant that additional inflows would have to be channelised only into domestic stocks.
Interestingly, the halt on fresh inflows impacted PPFAS AMC’s investments itself. The AMC's monthly investment of Rs. 3 crore from its profits/ revenue into the flexi cap fund got stopped as this was not registered as an SIP (systematic investment plan).
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