ICICI Pru AMC suspends global investments in its mid and small cap funds | Top Vip News

New Delhi: ICICI Prudential Asset Management Company has suspended new subscriptions through lump sum mode and is shifting to ICICI Prudential Smallcap Fund and ICICI Prudential Midcap Fund from March 14.

ICICI Prudential AMC’s move is a response to strong flows into the mid-cap and small-cap categories, causing these stocks to outperform large-cap stocks and stretch valuations.

Several other fund houses also stopped accepting global investments and imposed limits on investments in small and mid-cap funds.

Both the Nifty Midcap 150 Index and the Nifty Smallcap 250 Index have generated significant returns over the past year, at 55% and 59%, respectively, compared to 33% for the Nifty 100 Index.

Furthermore, the current share of mid- and small-cap stocks in the total market capitalization is 36.4%, higher than the last 15-year average of 25.4%, according to a report by ICICI Prudential AMC.

The asset manager recommended investing in a staggered manner, adding that systematic investments offer predictability in flows and are more efficient in their implementation due to their smaller ticket size.

ICICI Prudential AMC has allowed its systematic investment plans and systematic transfer plans to continue. But it has limited new SIP and STP registrations in $2 lakh per individual per month.

The SIP recharge feature will not be available for new registrations in these schemes as of now, the company said.

The Securities and Exchange Board of India has expressed concern over the high valuations of small and mid-cap stocks and has suggested money managers to limit capital inflows into these schemes.

This regulatory intervention aims to protect the interests of investors and ensure market stability.

The Association of Mutual Funds of India has also asked asset management companies to disclose how many days they would need to liquidate their mid-cap and small-cap portfolios from March 15.