Earlier, Nippon, Tata and SBI MFs put restrictions on lump sum investments in their small-cap schemes, as high valuations and strong flows make it challenging for fund managers to deploy money. But ICICI will be the first fund house to restrict lump sum investments in a mid-cap fund.
It said in a notice that the fund house will not accept any fresh subscriptions through lump sum mode or switches into both its mid-cap and small-cap funds. However, it will continue to take fresh registrations through systematic investment plans (SIP) and systematic transfer plans (STP) with a limit of ₹2 lakh per PAN level per month per scheme.
“Keeping the interest of the investors protected from sudden market movements, the trustees have decided to temporarily discontinue subscriptions in the Schemes,” said the fund house in a notice to investors. The AMC may accept lump sum subscriptions … in the schemes at a future date when in its assessment the valuations become attractive and fresh approval shall be sought from the Board of Trustee in this regard at that time,” the notice said.
In the last one year, the S&P BSE 250 Small Cap TRI (Total Returns Index) rose 55.53%, while the S&P BSE 150 Midcap TRI rose 54.24%, while the Nifty rose 29.22%. ICICI Prudential Midcap Fund returned 50.52%, while ICICI Prudential Smallcap Fund rose 42.6% in the same period.
The fund house believes as the share of mid and small cap stocks in Total Market cap is growing rapidly, valuations in this space have turned relatively higher.The current share of mid and small cap stocks in the total market cap is 36.4% vis-a-vis the past 15-year average of 25.4%.
