DSP Blackrock has stopped taking fresh investments in their Micro Cap mutual Fund from Feb 17, 2017. This is not happening for the first time. In September 2014, the fund stopped taking more than 2 lac of investments. In August 2016, they reduced the limit to 1 lac and in 2017, they have completely stopped taking fresh investments.
The existing investments and on-going SIPs will continue to be invested in the fund. They can withdraw whenever they want. There is no restriction on exit other than the 1% exit load for first 364 days. But, the investors cannot transfer from other DSP Blackrock mutual funds to Micro Cap and cannot increase their SIP amount after Feb 17, 2017.
Currently, the AUM of DSP Blackrock Micro Cap is 4,750 Cr. It invests in microcap companies. Below is the returns graph of the fund for past 10 years. Clearly, the fund has consistently outperformed the benchmark – S&P BSE Small Cap. It has generated around 25.8% alpha in past 3 years, over the benchmark.
At an annual basis, the fund has generated following very good returns
Here is a quick look at the AUM at a quarterly basis and the restrictions on the fresh investments introduced by the fund. Clearly, as the AUM has shot up, the restrictions have come through.
DSP Blackrock Micro Cap is a pretty diversified fund. Top 10 companies cover mere 27% of the portfolio. The top 3 sector – Chemical, Textile and Construction covers around 41%. The average market cap of the holding companies is 3,400 Cr while the category average is 5,400 Cr. The fund has a very low turnover ratio of 18%. The turnover ratio is the percentage of a fund’s holdings that have been replaced in a given year.
Mirae Asset Emerging Bluechip fund has an AUM of 3,000 Cr. It invests in mid-cap companies. Below is the chart of its performance since the launch in 2010. Clearly, this fund has outperformed its benchmark – Nifty Free Float Midcap 100. Over last 3 years, the fund has generated an alpha of 20.7% over the benchmark.
DSP Blackrock Microcap is suspending taking fresh investments. This is not unusual for small and mid-cap mutual funds. As the AUM increases, it becomes difficult to continue giving good performance for such funds.