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Kotak Mutual Fund has followed other asset managers in putting restrictions on investments into its Rs 14,500 crore small cap fund following a sharp rally in small cap stock prices, expected global elections and limited availability of new small cap companies in the listed market.

However, Kotak MF is confident of future earnings growth among smaller firms. They think these corporations are geared to benefit from an expanding economy thereby shoring up their valuations.

Although, the fund house also warned investors against having too much hope. In an email to investors they said, “While Small Caps have done well in the past it is important to keep expectations realistic. The returns seen lately will probably cease at this rapidity and become more normalized. Hence do not yield to the temptation of over allocating based on recent performance.”

Effective February 26th , 2024; this scheme permits retail investors to make lump sum investments in multiples of Rs 200000 and systematic investment plans (SIPs) of as low as Rs 25000 per month into the Kotak Small Cap Fund.

This move by Kotak MF brings out the fact that there is an ongoing debate about whether or not there can be sustainability for a little while longer of this bursty rally for small caps and how cautiously investors must be because even if we are looking downforward into the future returns.


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