Returns less likely; fund houses put caps on fresh inflows
Returns less likely; fund houses put caps on fresh inflows
MUMBAI: With the prospects of small and mid cap stocks delivering exceptional returns looking less likely going forward, a few fund houses have started putting caps on the fresh inflows into mutual fund schemes focussed on small cap stocks.
According to industry experts, small cap stocks are not expected to repeat the same kind of performance, which they have registered during the past one-year. The BSE small cap index has rallied 91.82 per cent over the last one year as compared to 33.84 per cent gain registered by the Sensex and 67.41 per cent gain posted by BSE mid cap index.
During this period, the small and mid cap MF schemes topped the chart with an average annual return of 84.95 per cent. Since the small cap stocks have rallied sharply on the domestic bourses, market pundits do not see a major opportunity in this space.
They pointed out that a few fund houses have put caps on fresh inflows into small cap schemes, as the fund managers are a bit concerned about their future performance.
“Mutual funds are not allowed to hold more than 35 per cent of the funds corpus in cash. As a policy decision, most of the fund houses deploy 95 per cent of the fund’s corpus at any given point of time.
With many of the quality small cap stocks rallying sharply during the past few months, the options before the fund managers are very less. Additionally, the risk levels in these counters have also grown by over 50 per cent as compared to May 2014 levels,” said Surajit Misra, executive vice-president and national head, mutual funds at Bajaj Capital.
“We have put some restrictions on fresh inflows into small cap schemes since May 2014. We are allowing only small investors to make investments. We believe that too much inflows into any particular scheme is little risky,” said Sunil Singhania, head of equities at Reliance MF.
( Source : dc correspondent )
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