Why are some mutual funds restricted to SIP or one-time investments only?
This is not a technical issue—it's usually a decision made by the fund’s Asset Management Company (AMC) or the stock exchange to manage risk and ensure better fund performance. Let’s break down the reasons and what you can do if one option isn't available.
What causes SIP- or one-time-only restrictions?
Restrictions are typically based on operational, regulatory, or market-driven reasons. Here are some common scenarios:
1. AMC or exchange restrictions
- Fund houses and exchanges set rules on how funds can accept investments.
- These rules help control fund size, manage liquidity, and prevent sudden inflows or outflows.
2. Fund type and risk level
- High-risk funds like small-cap or sectoral funds may allow only SIPs to reduce volatility exposure.
- SIPs distribute investments over time, helping manage risk during market ups and downs.
3. Cash flow and liquidity management
- Lumpsum inflows can disrupt fund balance or exceed fund capacity.
- AMCs may suspend one-time mode to manage liquidity or ensure gradual capital deployment.
4. Fund size or sector overheating
- Restrictions may be imposed to prevent the fund from becoming too large too quickly.
- In heated sectors, AMCs might limit investment options to avoid overvaluation or speculative surges.
- Occasionally, the restriction may be due to temporary operational issues or configuration settings on the investment platform.
6. Minimum investment thresholds
- Some schemes have high minimum amounts for one-time investments, effectively restricting users to SIPs.
What If?
| Scenario | Explanation |
|---|
| You want to start SIP in a lumpsum-only fund | Not allowed; consider choosing a similar fund that supports SIPs. |
| Fund previously supported both, now only one | AMCs may revise rules—check for updates or notices on the FYERS platform. |
| Can't find the SIP option for a fund | It may be a lumpsum-only NFO or have AMC-imposed restrictions. |
| SIP installment fails due to fund mode change | SIP may get paused or cancelled; FYERS will notify you if this occurs. |
Check the AMC factsheet or Scheme Information Document (SID) for allowed investment modes, which you can go to from the About section in the fund detail page.
Last updated: 10 Jun 2025
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