Kotak Mutual Fund announced the resumption of subscriptions for their small-cap fund, effective today (2 July). Improved market conditions following India's recent elections were cited as a key reason for this decision.
According to a communication sent to customers, reduced political uncertainty has led to a more stable environment for small-cap stocks. Kotak Mutual Fund also expressed optimism about the future earnings potential of small companies.
The communication stated that small-cap earnings are expected to improve, and firms are positioned for robust growth. The expanding economy is expected to further benefit smaller businesses.
However, the fund house advised investors to be realistic. While small-cap stocks have seen strong performance recently, future returns are unlikely to maintain the same pace. Investors are encouraged to avoid basing investment decisions solely on recent performance.
This decision comes after Kotak Mahindra Asset Management Company (AMC) implemented restrictions on lump-sum investments in their small-cap fund in March 2024 due to a surge in small-cap stock prices. Fund managers found it challenging to manage continuous inflows amid elevated valuations.