Published: 21st Aug 2024
By: Value Research
Recently, HDFC Defence Fund, India’s first defence-only fund, halted fresh SIP registrations, much to the dismay of potential investors. There can be various reasons for this. Here, we look at three reasons why a fund may not be accepting new investments.
Funds can restrict fresh inflows if they feel the market is overvalued. In such cases, fund managers may see little value in making incremental investments.
When the markets are overvalued, companies end up trading at stretched valuations. As a result, finding lucrative investment opportunities becomes a challenge. To avoid sitting on large piles of cash during such periods, funds end up stopping fresh inflows.
In recent years, some small-cap funds have stopped SIPs when they feel the market is overheated. Small-cap funds of Tata, Kotak, SBI, Nippon India and ICICI Prudential are a few examples.
In certain cases, regulatory bodies like SEBI and AMFI may mandate fund houses to stop accepting fresh SIPs temporarily. To read the full story, click here: