It is absolutely fine to move your investment in a lump sum from one equity fund to another. The whole idea of investing in a staggered manner through a Systematic Investment Plan (SIP) or a Systematic Transfer Plan (STP) is that you are able to average your investment in equity. And reduce the risk of investing all your money when the market is at its peak. But if all your money is already invested in equity, averaging has already been done at the time when you invested in the initial fund. You can now move all your accumulation into the new fund as a lump sum. Just be careful about the exit load and the short-term or long-term capital gains tax.
Also, huge assets under management (AUM) may not necessarily be a deterrent to the fund's performance. Further, it's a relative thing. What is big as an AUM for a particular category of funds may not be big enough for another category of funds. For example, an AUM of Rs 5,000 to 6,000 crore is quite huge in the case of a small-cap fund. The fund manager may find it difficult to find suitable opportunities. As these funds invest in small companies and if one has to deploy a larger amount without concentrating on the portfolio, he would need a larger set of good companies.
On the other, a corpus of just Rs 6,000 crore would be considered too small, in the case of a large-cap fund. It is normal for large-cap funds to have an AUM of around Rs 20,000 to Rs 30,000 crore. Likewise, anything above Rs 10,000 crore can be considered huge for a flexi-cap fund. Because then it may not remain true to its flexi-cap nature. As even a small allocation of 10-15 per cent would be quite meaningful and the fund manager may not find enough opportunities in the small-cap space.
Want more clarity on how big is too big for a fund? Watch this video!
This article was originally published on April 05, 2022.
Ask Value Research 
New episodes every Friday 
New Process Alert 
Seems like you've uploaded a wrong QR code. Please upload the QR code downloaded from MF Central platform.
