Kotak Mutual Fund restricts flows into small-cap fund
Kotak Mutual Fund will restrict flows into its small-cap scheme from March 4, joining the likes of Nippon and Tata in limiting investments into this product category as elevated share valuations have made it challenging for fund managers to handle continuous flows. The fund house said in a notice that fresh subscriptions through lumpsums will be restricted for each investor to ₹2 lakh per month. Investments through systematic investment plans (SIPs) into this product also will be capped at ₹25,000 for each investor per month.
«Few stocks in the small- and mid-cap segment have multiplied, and strong momentum is taking them beyond the fair value of businesses,» said Kotak in a letter to investors. «We believe our funds are positioned defensively, emphasising the quality of businesses. However, given the market background, we see it prudent to limit the inflows in our Small Cap Fund at this juncture.»
Kotak Mutual said it will review this decision in the second quarter (April-June) of this calendar year if more investing opportunities arise or valuations become more palatable.
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In the last three months, the S&P BSE Small Cap TRI (Total Returns Index) rose 16.21%, while over the last year, it rose 64.54%. In the same period, the Nifty rose 12.35% and 28.27%, respectively.
Managed by Harish Bihani, Kotak Small Cap, which manages assets worth ₹14,426 crore, has returned 39.33% in the past year, as against its
