Here are the stress test results of top five small cap funds

In response to SEBI's directive, AMFI has instructed all fund houses to conduct stress tests for their small cap funds. This initiative is prompted by concerns regarding the increasing volatility in the small cap market segment and the consistent inflow of funds into small-cap schemes of mutual funds.

SEBI has tasked AMFI with conducting these stress tests to enhance mutual fund investors' awareness of the risks associated with market downturns. The stress tests aim to assess the ability of fund managers to liquidate investments in small cap funds if investors decide to redeem their holdings during adverse market conditions.

All fund houses are required to publish the stress test reports on their respective websites by March 15. Additionally, these reports should be updated every two weeks to ensure investors have access to the latest information regarding the liquidity and resilience of small cap funds.

Here are the details of the top five small-cap funds based on 5 year performance and how quickly they can get liquidate:

Quant Mutual Fund:

• The fund house will take 22 days to liquidate 50% of the small cap portfolio
• The fund house will take 11 days to liquidate 25% of the small cap portfolio

Bank of India Mutual Fund:

• The fund house will take 2 days to liquidate 50% of the small cap portfolio
• The fund house will take 1 day to liquidate 25% of the small cap portfolio

Nippon India Mutual Fund:

• The fund house will take 27 days to liquidate 50% of the small cap portfolio
• The fund house will take 13 days to liquidate 25% of the small cap portfolio

Edelweiss Mutual Fund:

• The fund house will take 3 days to liquidate 50% of the small cap portfolio
• The fund house will take 2 days to liquidate 25% of the small cap portfolio

Axis Mutual Fund:

• The fund house will take 28 days to liquidate 50% of the small cap portfolio
• The fund house will take 14 days to liquidate 25% of the small cap portfolio