Motilal Oswal Nifty Microcap 250 Fund: Fresh inflows stopped in consultation with Sebi, not due to performance concerns, says Pratik Oswal

Launched in July 2023, the fund tracks the Nifty Microcap 250 Total Return Index, which represents 250 companies outside the Nifty 500 universe.

• Motilal Oswal AMC halts new inflows into Nifty Microcap 250 Fund post-SEBI talks
• Pause is for regulatory alignment, not fund performance or liquidity issues
• Existing investors unaffected; redemptions remain open

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Motilal Oswal Asset Management Company said its decision to pause fresh inflows into the Motilal Oswal Nifty Microcap 250 Index Fund was taken in consultation with the market regulator and should not be interpreted as a reflection of concerns over the fund’s performance or liquidity position.

Also read: Motilal Oswal AMC pauses fresh inflows into Nifty Microcap 250 index fund after SEBI talks

Speaking to Moneycontrol, Pratik Oswal, Head of Passive Funds at Motilal Oswal Asset Management Company, said the fund was launched with all necessary regulatory approvals and that the recent restriction aligns with regulatory expectations.

“The Motilal Oswal Nifty Microcap 250 Index Fund was launched with due approval from SEBI. The pause on fresh inflows has been undertaken in consultation with SEBI, as microcap is currently not part of the regulator’s formal market-cap classification framework,” Agarwal said.

Launched in July 2023, the fund tracks the Nifty Microcap 250 Total Return Index, which represents 250 companies outside the Nifty 500 universe. Since inception, the scheme has delivered cumulative returns of around 20–22 percent, broadly in line with the underlying index. Over the past year, returns have remained subdued amid a broader correction in the microcap segment, with the index posting a one-year total return of –1.5 percent and a year-to-date decline of 3.7 percent.

Oswal stressed that the pause does not signal stress in the portfolio. “This step reflects regulatory alignment and prudent risk management. It should not be interpreted as a view on portfolio quality or a liquidity crunch,” he said.

The asset manager added that existing investors are unaffected. Redemption facilities remain open and the fund will continue to be managed in line with its stated investment structure. The scheme currently manages assets of about Rs 2,625.6 crore.

The only historical instances when funds stopped accepting fresh inflows were due to concerns over performance arising from overheating in certain market segments. Several fund houses, including SBI Mutual Fund, Tata Mutual Fund, Nippon Mutual Fund and others, have shut their windows for fresh investments into small-cap funds at various points because of overheating in the segment. Separately, investments into international funds have been capped due to regulatory limits on overseas investments.

Motilal Oswal AMC said it remains in active dialogue with the regulator on the way forward, with investor protection and compliance as the primary objectives.