Mutual Funds Stress Test Results: What mid-cap funds and small cap funds data reveal

Stress Test Results of Mutual Funds mentioned below:

Nippon India Small Cap

Nippon India Small Cap is the largest scheme in the small cap category. The fund house mentioned that it will require 27 days to liquidate 50 per cent portfolio.

Quantum Fund

Quantum Small Cap Fund is considered to be the smallest scheme in the small cap category. The Quant midcap fund house in ‘Stress Report’ stated that it will require six days to return money if investors sell out half 50 per cent of the fund; for 25 per cent, it would take 3 days to get 25 per cent back.

Meanwhile, Quant Small Cap fund would take 22 days to return your money if you want to sell out half and 11 days for 25 per cent.

SBI Mutual Fund

SBI Mutual Fund stated that its small cap fund will take 60 days to liquidate its 50 per cent portfolio and the liquidation process of 25 per cent of its portfolio would be done in 30 days. SBI Mid Cap Fund: 24 days to liquidate 50 per cent portfolio and 12 days to liquidate 25 per cent.

Edelweiss Mutual Fund

Edelweiss small cap fund said 50 per cent of its portfolio could be liquidated in three days and two days to sell 25 per cent.

HDFC Mutual Fund

HDFC Mid-Cap Opportunities Fund will take 23 days to liquidate 50 per cent of the portfolio and 25% of the portfolio would be liquidated in 12 days. HDFC Small Cap Fund stated that 42 days time is required to liquidate 50 per cent and 21 days to liquidate 25 per cent of its portfolio.

Kotak Mutual Fund

Kotak Emerging Equity Fund and Kotak Small Cap Fund stress report: 17 days each to liquidate 25 per cent of the portfolio. The midcap and smallcap schemes will take 34 and 33 days respectively to liquidate 50 per cent of the portfolios.

Why Mutual Funds Stress Test was ordered?

The stress report was released on the orders of SEBI which asked Mutual Funds houses to formulate policy to protect investors’ interest during the market crash scenario. The order was also a result of concerns regards to the massive building in mid-cap and small-cap segments in the recent times.

The SEBI and AMFI asked for the stress report so that there is stability and investors’ confidence remain intact and enhance transparency. The Stress Report would disclose certain additional data points relating to valuation, volatility, investor concentration, and the percentage holding in small and mid-cap stocks, along with disclosures on stress testing results.

The stress test would be conducted by Mutual Funds done once every 15 days to keep a record on how the funds are placed.