SBI MF, DSP MF open small-cap funds for lump sum flows amid correction

Lump sum investments are tactical infusions one can make at any point, based on his view. They differ from SIPs in which investments are made on a monthly basis

SBI Mutual Fund (MF) and DSP MF opened their small-cap funds for accepting lump sum investments amid a sharp correction in valuations of small-cap stocks. 

Lump sum investments are tactical investments, which an investor can make any time. This is in contrast to systematic investments, which are routed through systematic investment plans or SIPs on a monthly basis.

Starting Monday, SBI Small Cap Fund allowed lump-sum investments until it received net inflow of up to Rs 1,000 crore from the date of opening the scheme for lump-sum subscriptions. SIPs were allowed in the scheme with certain caps. From April 1, DSP MF has decided to revoke the temporary suspension of lump-sum investments in units of DSP Small Cap Fund.

“Over the last two years, the S&P BSE Small Cap TRI (total return index) has fallen cumulatively 56 per cent. We currently have the ability to invest in great businesses at attractive valuations, thereby making the risk-reward proposition favourable at current valuations,” said Vinit Sambre, head-equities at DSP MF.

Further, experts say that timing becomes important in the small-cap segment.

“We would like to take money when we find interest in the category to be very low,” said Kalpen Parekh, resident at DSP MF.