The scheme, launched as a closed-end scheme in February 2018 with a maturity of 1,222 days, went open-ended in May 2021 when it had assets of ₹522 crore. With the assets doubling to ₹1,091 crore as of December 2021, the fund house has decided to put restrictions on flows.
“After quick growth in the fund AUM since launch, we want to take this opportunity to review portfolio liquidity and also look at the IPO pipeline in coming months,” said Radhika Gupta, CEO, Edelweiss Mutual Fund.
She said the fund has reached a size where it is prudent to limit inflows.
The scheme has 75% of its portfolio in mid- and small-cap stocks with the balance in large-cap names. The top holdings of the fund are Sona BLW, Gland Pharma and MTAR Technologies. Given the sharp run in the markets, many fund managers believe valuations are rich, especially in the mid and small cap space where there is not enough liquidity.
The scheme beat its benchmark over 1- and 3-year periods, returning 57.69% and 36.94% as compared to S&P BSE 500 TRI, which returned 33.45% and 21.49%, respectively.
“Many IPOs that happen and are attractive are of companies with market capitalisation less than ₹10,000 crore and are mid and small caps. Since liquidity is low and the theme narrow, it is important for a fund house to put a cap on flows to protect existing unitholders,” said Rupesh Bhansali, head (distribution), GEPL Capital.
He believes investors who can take volatility with a time frame of 5-10 years can invest in a staggered manner in this fund.