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Business News/ Mutual Funds / Mutual funds stress test: Small cap funds' liquidity improves, albeit slightly
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Mutual funds stress test: Small cap funds' liquidity improves, albeit slightly

Tata Small Cap fund will now require 29 days and 15 days, respectively, to liquidate 50 percent and 25 percent of portfolio, against 35 and 18 earlier in February.

It is worth recalling that mutual fund houses are meant to reveal the level of liquidity enjoyed by their small and mid-cap schemes each month by carrying out a ‘stress test’.Premium
It is worth recalling that mutual fund houses are meant to reveal the level of liquidity enjoyed by their small and mid-cap schemes each month by carrying out a ‘stress test’.

The disclosure of stress test and liquidity analysis in respect of small cap funds revealed that the time period required to liquidate portfolio has reduced, albeit marginally.

Axis small cap fund will now need 27 days to liquidate 50 percent of their portfolio and 13 days for 25 percent of portfolio against 28 days and 14 days, respectively, the table below shows.

Tata Small Cap fund will now need 29 days and 15 days, respectively against 35 and 18 days earlier in the month of February.

Meanwhile, Nippon India Small Cap Fund will need 29 days and 15 days, respectively, to liquidate 50 percent and 25 percent of its portfolio against 27 days and 13 days earlier.

Conversely, Kotak Small Cap Fund will require 34 days instead of 33 earlier to liquidate half of its portfolio.

It is worth recalling that mutual fund houses are meant to reveal the level of liquidity enjoyed by their small and mid-cap schemes each month by carrying out a ‘stress test’.

Stress Test for March

Small Cap funds50% (no of days to liquidate) 25% (no of days to liquidate)
Axis Small Cap Fund                                  2713
DSP Small Cap Fund                              3216
HDFC Small Cap Fund                                                             4422
Kotak Small Cap Fund                                                                  3417
Nippon India Small Cap Fund                        2915
SBI Small Cap Fund                                        5829
Tata Small Cap Fund                                  2915

Stress Test for February

Small Cap Funds50%    25%
Axis Small Cap Fund          2814
DSP Small Cap Fund                3216
HDFC SCF                                  4221
Kotak                                              3317
Nippon India Small Cap Fund      2713
SBI Small Cap            6030
Tata Small Cap Fund               3518

These directions were issued by the Association of Mutual Funds in India (AMFI) after witnessing froth in the mid and small cap stocks. Retail investors are meant to be cautioned through these disclosures before they invest in small and mid-cap mutual funds.

This holds a lot of significance when a few fund houses, after witnessing the massive inflow of funds in their schemes, restricted the lumpsum investment in their schemes.

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Published: 16 Apr 2024, 03:24 PM IST
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