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DSP BlackRock stops flows in its fund for now

Chandan Kishore Kant / Mumbai 15 Feb 17 | 06:22 AM

DSP BlackRock Mutual Fund on Tuesday said it would suspend fresh investments for now in its Micro Cap Fund from Monday. DSP BlackRock Mutual Fund said it has decided to temporarily suspend fresh transactions "as there is a possibility that large inflows into the scheme may prove detrimental to the interest of the existing unit holders."

It is not the first time the fund house has taken such a step. Earlier, in September 2014 and August 2016, the fund house had imposed partial restrictions on inflows.

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Managed by Vinit Sambre and Jay Kothari, the Micro Cap Fund had an asset size of Rs 4,780 crore as on January 31, 2017. The fund has given a return of 48.86 per cent over the last one year, according to the data available from Value Research.

Interestingly, since August 2013, the fund's size has increased 14 times, from Rs 307 crore to Rs 4,780 crore, Morningstar Investment data show.

Vinit Sambre, senior vice-president and fund manager, DSP BlackRock, 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, to increase stock weightage of companies to a meaningful size in the portfolio."

Himanshu Srivastava, senior analyst manager research at Morningstar Investment Adviser India, said the move is a step in the right direction.

"Bigger and growing fund size, particularly for a small and mid-cap fund, can pose challenges to the fund in the form of market-impact cost and opportunity cost," he said.

The fund's investment universe comprises of stocks beyond the top 300 companies by market capitalisation. Most of these stocks in this segment have seen sharp surge in valuations.

The fund house said that the temporary suspension will continue till further notice.

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