DSP BlackRock MF restricts fresh flow to Microcap Fund

DSP BlackRock Mutual Fund today said it has decided to curb fresh inflows into its Microcap Fund, an open ended diversified equity growth scheme, after February 17.
In a public notice, the fund house said that subscription, systematic investment plan (SIP), systematic transfer plan (STP) received from investors in DSP BlackRock Microcap Fund "post the cut-off timing of February 17, shall not be accepted".
This would continue till further notice.
The step has been taken as there is a "possibility that further larger inflows into the scheme may prove detrimental to the interest of the existing unit holders".
This is not the first time when inflows have been reportedly restricted by DSP BlackRock in its Microcap Fund.

Earlier in August last year, a sum of Rs 1 lakh was restricted per person. Prior to that, in September 2014, it had put a restriction of Rs 2 lakh for daily lump sum subscription.

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The company attributed the reason for curbing fresh inflows into DSP BlackRock Micro Cap Fund to its current size, which is posing the bigger challenge of liquidity.
DSP BlackRock Micro Cap Fund's assets under management as on January 31, 2017 was close to Rs 4,780 crore, making it among the largest funds in this category.
"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," said Vinit Sambre, Senior Vice President and Fund Manager at DSP BlackRock.

Aditi Kothari Desai, EVP and Head Sales, Marketing & E-Business at DSP BlackRock said: "Having less than desired weightage in stocks that the fund invests in, can limit the fund's ability to generate returns in the future. Hence, in the interest of existing investors, we have taken a decision to stop accepting fresh investments - both via lumpsum and SIPs".
Himanshu Srivastava, Senior Analyst-Manager Research at Morningstar Investment Adviser, has welcomed the decision of DSP BlackRock MF stopping fresh inflows into DSP BlackRock Microcap Fund said it is a step in the right direction.