From February 20, DSP BlackRock MF will stop accepting new lump sum applications in its flagship scheme, DSP BlackRock Micro Cap Fund in order to consolidate bulky inflows. The fund house has also restricted fresh inflows through SIPs.
Earlier fund houses like IDFC, Mirae Asset and SBI MF had curbed investments in their respective mid-cap funds. However, those restrictions applied only to a ceiling on lump sum investments.
The fund house said that there is a possibility that large inflows into the scheme may prove detrimental to the interest of the existing unit holders.
The fund manager of this scheme, Vinit Sambre, Senior Vice President and Fund Manager, DSP BlackRock MF said, “While we continue to find interesting investment opportunities for the fund to invest in, its current size poses the bigger challenge of liquidity. It is challenging to incrementally build positions, i.e. to increase stock weightage of companies to a meaningful size in the portfolio.”
“These transactions include all subscription/switch-in applications of new SIPs, STPs, dividend transfer plan (DTP) in the scheme. The scheme will continue to allot units for subscription transactions pertaining to SIP, STP, DTP, Super SIP facilities registered before February 20, 2017,” said a press release issued by the company.
Aditi Kothari Desai, EVP and Head - Sales, Marketing & E-Business, DSP BlackRock said, “Having less than desired weightage in stocks that the fund invests in, can limit the fund’s ability to generate returns in the future. Hence, in the interest of existing investors, we have taken a decision to stop accepting fresh investments - both via lump sum and SIPs.”
“Small cap stocks are volatile. Sometimes, the fund manager ends up deploying cash in money market because stocks tend to be overvalued. In addition, these stocks have a liquidity issue. Hence, closing the scheme from high value subscription is a good move to minimize risk,” said a Mumbai-based IFA.
Value research data shows that DSP BlackRock Micro Cap Fund has delivered CAGR of 19% since inception. It has given CAGR of 45% and 29% in 3 and 5 year respectively.
The fund currently manages AUM of Rs.4780 crore as on January 30, 2017.
