Nippon smallcap mutual fund revises exit load and limits subscription

Nippon India Mutual Fund has decided to revise the exit load and limit subscriptions in Nippon India Small Cap Fund. The fund house informed about this to the investors through a notice-cum-addendum.

The changes will be effective from March 22.

Exit load

The tenure for the exit load will be changed from one month to one year.

Also Read | Foreign flavour helping mutual fund investors mint money as D-Street slows down

The fund house mentioned that with effect from October 1, 2012, exit load if charged to the scheme shall be credited to the scheme immediately net of goods and service tax, if any.

The revision in exit load shall be applicable on a prospective basis to; (a) all the subscription transactions (including switch-in) processed with NAV of March 22, 2024, and thereafter, irrespective of receipt of application. (b) all the systematic transactions such as Systematic Investment Plan (SIP) and Systematic Transfer Plan (STP) etc. where registrations/enrolments have been done on or after the effective date.

Limit on subscriptions

The fresh registrations through Systematic Investment Plan (SIP) or Systematic Transfer Plan (STP) or such other special product whether single or multiple applications shall continue with an investment limit of Rs 50,000 per day per PAN.

The fund house informed that the limit on the subscription of units has been proposed to facilitate gradual deployment of corpus to align with the nature of smallcap investing. The step is warranted considering the recent sharp rally in the smallcap space and increased investor participation through high-ticket investments which would be in the best interest of existing unit holders and appropriate for incremental investments.

The above-mentioned investment restrictions will not be applicable for investments mandated as per regulatory requirements i.e. alignment of interest of designated employees of AMCs with the unitholders of the mutual fund schemes and mandatory contribution by AMC in its schemes. The aforesaid restriction will not affect SIP or STP or such other special products registered before the effective date and the unitholders under the Dividend Reinvestment Option. All other features, terms, and conditions of the above-mentioned scheme shall remain unchanged.

Also Read | Number of days top 10 smallcap MFs will take to liquidate their portfolios

This addendum forms an integral part of the Scheme Information Document (SID)/Key Information Memorandum (KIM) of the scheme. All the other terms and conditions of the aforesaid documents read with the addenda issued from time to time will remain unchanged.

The fund house recently released its stress test on the Nippon India Small Cap Fund. Nippon India MF will require 13 days to liquidate 25% of the smallcap portfolio and 27 days to liquidate 50%. The total percentage of AUM held by the top 10 investors in the smallcap scheme is 0.91%.

Nippon India Small Cap Fund is an open-ended equity scheme predominantly investing in smallcap stocks.

Nippon India Small Cap Fund, the largest scheme in the smallcap category based on assets managed, has a total asset base of Rs 46,044.13 crore as of February 29, 2024.