Tata Asset Management is not looking to lift the cap on its small-cap funds as the segment still has issues around liquidity, valuation and investment ideas.

Last July, Tata Mutual Fund decided to suspend lump sum investment in its Small Cap Fund and accepts investment only through systematic investment plans.

Anand Vardarajan, chief Business Officer, Tata AMC said the fund house is not in a hurry to lift the restrictions imposed on the small-cap fund as there are no changes in the impediments including valuation, liquidity and fresh ideas ever since the cap was imposed.

Kotak Mutual Fund last week lifted the restriction on investment in its small-cap fund after four months as the fund house saw earnings growth in this sector.

The fund house believes that earnings growth of small-caps is expected to improve, and companies are poised for robust earnings growth as the economy continues to expand, it said.

“We are still getting inflows in the small-cap fund through SIP and we do not see any problem in handling them,” he said at the event to launch the industry’s first Tata Nifty India Tourism Index Fund which opened for subscription on Monday.

The open-ended index fund has leading companies from travel, tourism and hospitality businesses. These companies will benefit from the rising disposable income levels, evolving tastes of the Indian consumer and sustained higher discretionary spends, said Tata AMC.

Varadarajan said the industry is witnessing exponential growth in domestic aviation, hotels, restaurants and travel which augurs very well for the tourism segment.

“All types of travel, be it pilgrimage, business, medical or leisure are registering a surge. This makes a compelling case for looking at tourism as a segment and how one could invest and aim to benefit from the growth of this sector,” he added.

The growing middle class in India is fueling a surge in aspirational and experiential travel bolstered by significant investment in infrastructure, which have expanded air route capacities, making travel more accessible.

Additionally, technology advancements have revolutionised the travel and restaurant space, with the rise of online restaurant aggregators and a burgeoning delivery economy.

“As a result, India’s travel and tourism expenditure is projected to soar from $140 billion in 2019 to an impressive $406 billion by 2030, added Vardarajan.

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