DSP BlackRock Investment Managers has temporarily suspended all fresh transactions in its top performing, open-ended, micro-cap fund with immediate effect from February 20. Possible large inflows into the scheme may prove detrimental to the interest of existing unit holders, the asset management company said in a media statement on Tuesday.
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, i.e. to increase stock weightage of companies to a meaningful size in the portfolio.Vinit Sambre, Senior Vice President and Fund Manager, DSP BlackRock
The small cap fund is among the largest in its category with assets under management of Rs 4,780 crore as on January 31, 2017.
The fund's mandate is to invest in companies beyond the top 300 companies by market capitalisation. It has given a return of 49.1 percent in the last one year, compared to a return of 38.8 percent on the S&P BSE Smallcap Index, according to Bloomberg data.
This is the third time that DSP Blackrock is putting a restriction on lump sum investments. In August 2016, the fund house stopped accepting investment of more than Rs 1 lakh per investor daily in its Micro Cap Fund, according to a report in Economic Times. Before that, in September 2014, it had put a restriction of Rs 2 lakh for daily lump sum subscription.
"It is a wise thing to do. It has become too big and it is not easy to manage a micro-cap fund right now. Going by the valuation, it's not easy to manage rising inflows in a micro-cap fund," Dhirendra Kumar, founder and chief executive at Value Research told BloombergQuint over the phone.
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