Stocks

Nippon India reopens small cap fund

Suresh P Iyengar Mumbai | Updated on April 03, 2020 Published on April 03, 2020

Nippon India stopped accepting lumpsum investment in the small cap fund on March 26 and capped STP and SIP to ₹1 lakh per instalment   -  istock.com/Imilian

Follows similar move by SBI MF and DSP MF

Nippon India Mutual Fund has reopened its small cap fund for lumpsum investment and removed all restriction on investments which was imposed in 2018.

Nippon India stopped accepting lumpsum investment in the small cap fund on March 26 and capped STP and SIP to ₹1 lakh per instalment. In October 2019, it further tightened the fund flow by increasing the STP and SIP limit to ₹5 lakh per instalment.

Last month, the fund house reopened lumpsum investment with ₹5 lakh per instalment limit but decided to remove all the restrictions from Friday as the market continue to be ravaged by Covid-19 attack on economy.

Nippon India has become the third mutual fund after SBI Mutual Fund and DSP Mutual Fund to reopen its small cap fund for lumpsum investment due to sharp fall in small cap stock in recent market mayhem.

Opportunities in small cap

Samir Rachh, Fund Manager, Nippon Small Cap Fund. said there are lot of opportunities in small cap space and works favourable for investors looking for risk-reward returns.

The current market phase is very similar to 2013. There has been a significant fall in small cap stocks over the past 18 months.

Also read: Take advantage of volatility to build equity allocations, says Sailesh Raj Bhan of Nippon India AMC

“Hence given the current valuation and anticipated growth rebound, we expect the small caps to potentially outperform over the next 3 years,” he said.

Between September 2010 and August 2013, Nippon India Small Cap fund has delivered negative return of 5 per cent while BSE Small Cap index was down 19 per cent. However, between October 2013 and December 2017, the small cap fund registered a CAGR of 48 per cent while its benchmark index was up 35 per cent.

The downfall of the fund against started in January 2018 and till last month, it posted a negative return of 23 per cent against the benchmark’s fall of 27 per cent.

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Published on April 03, 2020
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