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Fund houses have started disclosing the result of the stress test for their mid-cap and small-cap schemes. They'll be revealing the test result by the 15th of every month.
What is a stress test?
This test will check how quickly small-cap and mid-cap funds can sell 25 per cent and 50 per cent of their holdings.
Why is there a need for a stress test?
SEBI, the markets regulator, and AMFI (Association of Mutual Funds in India) have been concerned about the large quantities of investor money - around Rs 64,000 crore - being poured into mid-cap and small-cap funds following a stellar performance in 2023.
As a result, the regulators directed fund houses to run a liquidity analysis based on a specific methodology to evaluate how many days it will take for any fund to liquidate 25 and 50 per cent of its portfolio. This test will indicate how quickly these funds can sell their holdings if investors want to exit their investments en masse during a market crash.
For the uninitiated, mid- and small-cap funds face issues when their asset size increases. One key concern during such times is portfolio liquidity. Meaning, these funds can find it tough to sell their stake in the face of high redemption pressure from investors.
Stress test table
The results have been trickling in since yesterday (March 14, 2024). You can view the table below to see how healthy your funds are. The table will be updated as and when fund houses release their stress test results.
Stress test results of small-cap and mid-cap funds
Based on February 2024 data
Also read: Are your mid and small-cap funds under stress?
Disclaimer: This content is for information only and should not be considered investment advice or a recommendation.
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