Nippon India Mutual Funds has imposed more restrictions on its schemes

Nippon India Mutual Funds takes the status of India's largest Mutual fund holder with an Asset Under Management AMU worth of INR 46044 crore. According to the decision Nippon Mutual Fund stated that it will accept only investment up to Rs 50,000 per day PAN in SIP Systematic Investment plan and STP Systematic Transfer plan.

One reason behind this big step of Nippon India Mutual Funds is that Nippon now wants to reduce the huge amount of investment in mid cap funds or small cap funds through this restriction. 

The second big reason is that this step will further increase the investment security of investors in Nippon mid-cap fund and Nippon Small-Cap fund.

Nippon took this decision after a Stress Test conducted at the behest of the Securities Exchange Board in which Nippon India MF will take 13 days to liquidate 25% of the small cap fund's portfolio and 27 days to liquidate 50% of the portfolio. Looking at the value of Assets Under Management of Nippon India MF, it should take only 4 days to liquidate 25% of the portfolio and only 8 days to liquidate 50% of the portfolio.

And this, Huge difference simply states that Nippon needs to make some major changes to protect the Investment Interests of its Investors.

Along with this, the company has also changed its exit load, where earlier an exit load of 1% was available on sell-off of units within 1 month of allotment, now the same exit load of 1% will be available on sell-off of units within 1 year.

Let us tell you that Nippon Mutual Fund is not the only Mutual Fund in India which is doing this, but SBI Small Cap Mutual Fund,  Tata Small Cap Mutual Fund, ICICI Small Cap Mutual Fund and Kotak Small Cap Mutual Fund have also imposed many restrictions in the fund policy to protect the investments of investors.

Mutual find said in a Notice " The limit on subscriptions of units has been proposed to facilitate the gradual deployment of corpus in order to align with the nature of small-cap investing. The step is warranted considering the recent sharp rally in the small-cap space and increased investor participation through high-ticket investments, which would be in the best interest of existing unit holders and appropriate for incremental investment.”