DSP BlackRock Investment restricts flow into micro-cap fund

| | Updated on: Sep 30, 2014

SEBI norm prescribes curbs on fund flow into specific schemes

DSP BlackRock Investment Managers has decided to temporarily suspend inflow of over ₹2 lakh into its DSP BlackRock Micro Cap Fund from Wednesday. It feels that large inflows into the scheme may prove detrimental to the interests of existing unit-holders. Consequently, DSP BlackRock has discontinued fresh subscription, switch-in and systematic instalment of over ₹2 lakh into the scheme.

₹1,277-cr AUM

The assets under DSP BlackRock Micro Cap Fund have risen to ₹1,277 crore from ₹350 crore in the last six months, making it among the largest funds in this category. In the last one year, the fund has delivered 100 per cent return. The net asset value with growth option stood at ₹30.61 a unit, while the dividend option quoted at ₹19.44 a unit.

The AUM of the MF industry touched a new high of ₹10.12 lakh crore, with an inflow of ₹6,300 crore in August.

Ajit Menon, Executive Vice-President and Head of Sales, DSP BlackRock Investment Managers, said the huge flow into the micro-cap fund has made it difficult for the fund manager to deploy them without impacting stock prices. This resulted in an increase in cash holding with the fund.

Re-opening possibility

“We would be comfortable to manage a fund flow of up to ₹1,500 crore into the scheme. We are also getting good flow into small- and mid-cap schemes,” he said. The scheme would be reopened without any restriction in a structured manner, keeping the interests of existing investors in perspective. According to market sources, IDFC MF and Reliance MF have imposed similar restrictions in the last one year.

Dinesh K Khara, Managing Director and CEO, SBI Mutual Fund, said at times, fund houses curb fund flows into a particular scheme to comply with SEBI norms.

This ensures that a scheme has at least 20 investors and no single person invests in 25 per cent of the scheme’s corpus. The norm makes sure that there is no large-scale selling to create liquidity when one big investor quits the scheme, said Khara.

Bull phase & inflow

“When the market is in the bull phase, fund houses tend to get huge inflows into the small- and mid-cap space from informed investors. We are also getting a good inflow and have no problem in managing them,” he said.

G Pradeepkumar, Chief Executive Officer, Union KBC, said the fund house is getting better inflows into mid- and small-cap funds as it does not have a micro-cap fund.

“We believe micro-cap funds are too risky for our target investors. With the market in the bull phase, we would like to increase our base by promoting the systematic investment plan,” he said.

Published on September 30, 2014

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