New Delhi: Kotak Mutual Fund has resumed subscription to its small-cap funds, after a gap of four months. The MF had restricted lump-sum investments in its small-cap funds in March 2024 following a significant rise in small-cap stock prices. Also, several fund houses have limited inflows into such funds due to a sharp increase in valuations driven by unprecedented inflows.

“We are resuming the subscription of units in Kotak Small Cap Fund, effective July 2. Political uncertainties around India’s elections are behind us. This has reduced market volatility, making the market more stable for small-cap stocks,” Kotak Mutual Fund said in a note to investors. “We believe that earnings growth of small caps is expected to improve, and firms are poised for robust earnings growth.

The expanding economy is expected to further benefit smaller businesses, supporting their valuations,” it added. In its note, the fund house also advised investors to maintain realistic expectations. “While small caps have performed well in the past, it’s important to set realistic expectations,” it said.