Thursday, February 22, 2024
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Tata MF to stop accepting lump-sum investment in small-cap fund


Tata Mutual Fund will stop accepting lump-sum investment in its small-cap fund from July due to difficulty in deployment of funds. The fund house will continue to accept inflows through systematic investment plan (SIP) and systematic transfer plan (STP) without any restrictions.

Tata Small Cap Fund, which has delivered 43 per cent return in the last three years, has asset under management (AUM) of ₹4,400 crore. The benchmark index in this category has delivered an average return of 35 per cent.

  • Also read: Markets near all-time high: Why invest in SBI Large & Midcap Fund?

The fund has been ranked No 1 by rating agency Crisil. Huge inflows and delay in deployment have led to cash holding of 14 per cent in the scheme.

Launched in November 2018, the fund invests 86 per cent in domestic equities, of which 65 per cent is invested in small-cap stocks and the remaining in large- and mid-cap stocks, besides debt instruments and REITs and InvITs.

Strong performance

Anand Vardarajan, Head-Business, Tata Asset Management, said the fund house has been seeing reasonable inflows in the small-cap fund on the back of strong performance. However, deployment takes time as these stocks are somewhat illiquid by nature.

“We do not wish to chase these stocks and take time to deploy. In order to protect investor experience, we have decided to stop lump-sum investments starting July. Investors can continue to invest through the SIP and STP route in this scheme,” he said.

The Current Net Asset Value (Regular plan) of the scheme is ₹28.91. The scheme charges 1 per cent on the redemption for units in excess of 12 per cent of the investments in 365 days.

Small-caps recover

In a remarkable display of resilience, several Nifty Smallcap 100 stocks have experienced a significant recovery from their 52-week lows, showcasing their ability to bounce back and generate substantial returns for investors. Two standout performers in this recovery journey are Mazagon Dock Shipbuilders and Jindal Stainless.

  • Also read: Multi-cap funds deliver better returns in volatile times

Jefferies India in its recent report said that the ongoing trend of mid- and small-cap stocks outperforming large-cap and multi-cap stocks is expected to continue due to strong inflows.

According to data from AMFI, 24 small-cap funds have received an inflow of ₹12,396 crore in the last five months and has cumulative AUM of ₹1.54-lakh crore.




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