Edelweiss Mutual Fund to Limit Flows to Recently Listed IPO Fund

Edelweiss Recently Listed IPO Fund, a program which invests in newly listed companies or those planning to enter the capital markets soon, will limit investments to a maximum of ₹1 lakh per day per investor from February 1.

The program, launched as a closed program in February 2018 with a maturity of 1222 days, became open in May 2021 when it had assets of ₹522 crore. With assets doubling to ₹1,091 crore in December 2021, the fund house moved to impose restrictions on flows.

“After rapid growth in the fund’s assets under management since launch, we want to take this opportunity to review the liquidity of the portfolio and also review the IPO pipeline in the coming months,” said Radhika Gupta, CEO of Edelweiss Mutual Fund.

She said the fund has reached a size where it is prudent to limit inflows.

The program holds 75% of its portfolio in mid- and small-cap stocks, with the rest in large-cap names. The fund’s main holdings are Sona BLW, Gland Pharma and MTAR Technologies. Given the strong rise in the markets, many fund managers believe that valuations are high, especially in the mid and small cap sector where liquidity is lacking.

The program beat its benchmark over 1- and 3-year periods, with returns of 57.69% and 36.94% against the S&P BSE 500 TRI, which returned 33.45% and 21.49, respectively. %.

“Many of the IPOs that happen and are attractive are for companies with a market capitalization of less than ₹10,000 crore and are mid and small caps. Since liquidity is low and the theme is narrow, it is important for a fund house to cap flows to protect existing unitholders,” said Rupesh Bhansali, Head (Distribution) of GEPL Capital.

He thinks that investors who can handle the volatility over a 5-10 year period can invest in this fund on a laddered basis.

Dolores W. Simon