ICICI Prudential Mutual Fund has announced a temporary suspension on the subscription of units into the ICICI Prudential Midcap Fund and ICICI Prudential Smallcap Fund, effective from March 14, 2024, until further notice. No subscriptions shall be accepted after 3 p.m. of March 13, 2024, the fund house said. This move aims to protect investors' interests from sudden market movements, the AMC said.
Details Of Restrictions
Fresh lumpsum investments or lumpsum investments for additional purchase of units are completely suspended from today at 3 pm. Fresh registrations for Systematic Investment Plans (SIP) or Systematic Transfer Plans (STP) will continue with a limit of Rs 2 lakh per PAN per month. The SIPs or STPs with daily, weekly, fortnightly, monthly, and quarterly frequency are limited to Rs. 10,000, Rs. 50,000, Rs 1 lakh, Rs 2 lakh and Rs 6 lakh respectively.
Further, the special products or features like Freedom SIP, SIP Top Up facility, Booster SIP, Flex STP, trigger etc will not be available for fresh SIPs or STPs registered in the schemes, the fund house said. The aforesaid restriction will not affect SIP or STP or such other special product registered before the effective date and the unitholders under IDCW Reinvestment Option, the fund house added.
The AMC may accept Lump sum subscriptions from investors in the Schemes at a future date (when in its assessment the valuations become attractive) and fresh approval shall be sought from the Board of Trustee in this regard at that time, the release said.
Reason Behind The Restrictions
ICICI Prudential Mutual Fund has said that the move is to protect the interests of investors from sudden market movements. Two days ago, Chairperson of the Securities and Exchange Board of India (Sebi) Madhabi Puri Buch expressed concerns about the overvaluation of small and mid-cap stocks, suggesting market manipulation and the risk of a market bubble due to over-enthusiasm among investors. As a result of whopping returns from small and midcap stocks, investments in small-cap mutual funds had doubled to more than Rs 41,000 crore in 2023 from the previous year, prompting the regulator to urge mutual fund houses to take measures to protect investors from market crash. Sebi then mandated stress tests for small- and mid-cap funds to assess whether there is sufficient liquidity to handle market crashes.
