SBI Mutual Fund (MF) and DSP MF have opened up their small-cap funds for accepting lump sum investments amid the sharp correction in valuation of these stocks in the recent market sell-off.
Lump sum investments are like tactical infusions that one can make at any point of time, based on his view. They differ from systematic investments that are routed through SIPs on a monthly basis.
Starting Monday, SBI Small Cap Fund will allow lump sum investments till it receives net inflow of Rs 1,000 crore. 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 by 56 per cent. We currently have the ability to invest in great businesses at attractive valuations thereby making the risk-reward proposition favorable at current valuations,” said Vinit Sambre, head-equities at DSP MF.
Further, experts say that timing becomes important in small-cap segment.
“We would like to take money when we find the interest in the category to be very low, reflecting in cheaper valuations, yet keeping focus on quality of businesses,” said Kalpen Parekh, President at DSP MF.