In an apparent move to check volatility due to large inflows and outflows of institutional money, HDFC Mutual Fund has decided to limit the maximum amount of investment in HDFC Short Term fund to Rs 10 crore per investor (for all folios) per calendar quarter.
The limit will come into effect from July 23, 2010. Short term funds are open-ended debt funds with maturity up to one year.
An HDFC Mutual Fund executive, who refused be named as he is not the official spokesperson, said that the fund house is positioning its short term fund as a retail scheme and hence want to put a check on large institutional investments. �Large institutional investments lead to higher volatility in a fund and hence our effort is to check such volatility associated with these funds to protect the interest of retail investors,� he added.
HDFC Short Term fund has assets under management of Rs 2,500 crore. It has given a return of 5.81 per cent in the past one year.
Surjit Misra, head, mutual funds, Bajaj Capital, told Value Research that fund houses are trying to attract more retail money in their short term debt funds. �High volatility is a key concern for retail investors in these funds. The volatility is mostly due to large inflows and outflows of institutional money. By putting a limit on maximum investments, fund houses are trying to do away with higher volatility associated with short-term debt funds,� he added.
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