Nippon India Small Cap Fund Shuts Its Doors to New Investments, Igniting a Pause in Potential Growth!

Nippon India

“Nippon India Mutual Fund Takes a Breather: Fresh Investments Put on Hold!”

In a surprising turn of events, Nippon India Mutual Fund has announced a temporary halt on accepting fresh subscriptions and switch-ins for their highly sought-after Nippon India Small Cap Fund. This decision came into effect from July 7 and will remain in place until further notice, as stated in their notice-cum-addendum released on July 6.

 

Nippon India

 

However, the fund house also reassured investors that fresh registrations through systematic investment plans without an initial investment or systematic transfer plans, along with other special products, will continue with a daily limit of Rs 5 lakh per PAN. This step aims to ensure a gradual deployment of the fund’s corpus, aligning it with the nature of small-cap investing.

Why Nippon India made this move?

The fund house highlighted the recent sharp rally in the small-cap space and increased investor participation through large-ticket investments. By temporarily suspending fresh investments, Nippon India Mutual Fund aims to protect the best interests of existing unit holders and create a suitable environment for incremental investments.

According to data provided by the Association of Mutual Funds in India (AMFI), the small-cap category experienced a significant influx of Rs 12,397.14 crore, the highest among all growth-oriented equity schemes from January to May 2023 (based on the last available data).

 

Nippon India

 

Nippon India Small Cap Fund, benchmarked against the Nifty Smallcap 250 – TRI, has showcased impressive performance over various time horizons. During the first half of 2023, the scheme yielded a commendable return of approximately 17.17%, outperforming the benchmark’s return of 11.46%. Since its launch in September 2010, the scheme has delivered an impressive return of 20.65%. Moreover, investors have enjoyed returns of 19.65% and 39.46% over the six-month and one-year horizons, respectively. The scheme has consistently outperformed its benchmark in these timeframes.

It’s worth noting that the aforementioned restriction will not affect existing systematic investment plans, systematic transfer plans, or any other special products registered before the effective date. Unitholders under the dividend reinvestment option will also remain unaffected.

Interestingly, Nippon India Small Cap Fund is now the third small-cap fund to temporarily halt fresh investments. SBI Small Cap Fund and Tata Small Cap Fund have already implemented similar measures, indicating a collective effort within the industry to navigate the evolving market dynamics.

Nippon India Small Cap Fund, an open-ended equity scheme predominantly focusing on small-cap stocks, boasts a diversified portfolio of 179 stocks. The top 10 stocks account for 16.29% of the fund’s holdings, ensuring a balanced and well-distributed investment approach.

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