WhiteOak Mutual Fund stops accepting lumpsums in Multicap Fund

WhiteOak Capital Mutual Fund has restricted investments into its Multicap Fund from October 4, making it the first scheme in this category to limit flows.

The asset manager said the scheme with assets of Rs 489 crore, which was launched in September, will not accept lump sum investments but will continue to accept money through Systematic investment plan (SIP) or Systematic Transfer Plans (STPs). The move comes in the wake of the recent sharp rally in mid-cap and small-cap stocks, which many in the market believe is excessive.

"WhiteOak Capital believes that funds that have a preponderance of narrow segments like mid- and small-cap should receive money in tranches gradually and not at any one point of time," said Aashish Somaiyaa, chief executive officer, Whiteoak Capital Mutual Fund. "Whenever huge returns come from a narrow segment of the market, it is primed for a rotation away and in favour of some other segment of the market."

Multicap funds must allocate a minimum of 25% each to large, midcap, and small-cap stocks. The balance 25% can be invested at the fund manager's discretion.

The Nifty Midcap 150 has moved up by 28% and the Nifty Smallcap 250 has gained 31.5% in the past year.

"WhiteOak AMC has restricted lumpsum investment in multi cap fund due to high valuations in small and mid cap as any correction can create pain for the lumpsum investors," said Anurag Garg, Founder, Nivesh.com

This is the first time that a multi-cap fund has put restrictions on inflows in its scheme. In the recent past, Tata Small Cap Fund and HDFC Defence Fund brought in limits on lumpsum investments in the schemes.

"Due to the sharp run-up in the market, the fund house (WhiteOak) must be finding it difficult to identify new ideas and deploy funds as many stocks across market caps are trading ahead of their fair valuation," said Abhay Mathure, a Mumbai-based mutual fund distributor.