SBI MF to stop accepting lump sum investments into Small Cap Fund


SBI MF will stop accepting lump sum investments into SBI Small Cap Fund. The
fund house will only accept systematic investment plans (SIPs) that up to Rs 5,000 per investor. The decision comes after a sharp rally in small cap universe since June.
SBI Small Cap Fund had stopped accepting lumpsum investments earlier from October 2015 to March 2020.

“Valuations have risen sharply. There are size constraints in managing a small cap fund. Hence in the interest of investors, we will stop lumpsum investments, “ says DP Singh, Executive Director, SBI Mutual Fund.

SBI Small Cap Fund, managed by R Srinivasan with assets of close to Rs 4,270 crore as of August end, is one of the best performing funds, having returned 22.42% over the last one year. Over three years and 5 years, it has returned 8.6% and 15.04% respectively.

The top three holdings in the scheme are PI Industries, ElgiEquipments and JK Cement. The PE of the NSE Small Cap 50 which fell to 13 in March end has doubled to 26.44 now, after the sharp rally in the markets.Financial planners believe investments in small cap funds should be made with a time frame of at least 8-10 years, as volatility could be high.

“Investors should not jump into the fund with lumpsum investments because the fund house will stop accepting it. This move indicates that the fund manager believes valuations are high and there are no meaningful opportunities in the space,” says Gajendra Kothari, Founder, Etica Wealth Management.

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