The second round of stress test and liquidity analysis for small and midcap funds appeared slightly better compared to the previous month’s results. Asset management companies (AMCs) were asked by capital market regulator Sebi to start conducting a regular stress test on their small and midcap funds to see how prepared the fund houses are to meet any sudden surge in redemption requests by their subscribers. Take a look at the performance of India’s top five fund houses in the stress test results for March 2024.

SBI Mutual Fund

In the stress test results for March published on AMFI website, India’s largest Fund House SBI Mutual Fund showed that its smallcap fund would now take 58 days to liquidate 50% of its portfolio against 60 days earlier. To liquidate 25% of its smallcap assets, the fund house would now take 29 days against 30 days showed in the previous test result.

In the midcap category, however, SBI Magnum Midcap Fund Regular saw its liquidity position going down slightly as now it would take 26 days to liquidate 50% of its portfolio against 24 days earlier. The fund house showed that it needed 13 days to liquidate 25% portfolio against 12 days mentioned in the results for February 2024.

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ICICI Prudential Mutual Fund

India’s second largest fund house ICICI Prudential Mutual Fund’s data showed that its ICICI Prudential Smallcap Fund would now take 11 days to offload half of its portfolio against 10 days earlier and 6 days to liquidate 25% against 5 days earlier. There is no change in its srtess test for midcap fund ICICI Prudential MidCap Fund as the AMC would still need 2 days to liquidate 50% portfolio and 1 day to offload 25%.

HDFC Mutual Fund

HDFC Mutual Fund, India’s third largest fund house, showed in the March test results that its HDFC Small Cap Fund would rquire 44 days to sell half of its portfolio and 22 days for one-fourth liquidation. In the February test, the fund house said its small cap fund needed 42 days to offload 50% portfolio and 11 days for 25%.

For its midcap fund, HDFC Mid-Cap Opportunities Fund, the fund house would need 24 days to liquidate 50% portfolio and 12 days for winding up 25%, as per the March test results. In February test, data showed that the fund house would need 23 days for half of portfolio liquidation and 12 days for 25%.

Nippon India Mutual Fund

Nippon India Mutual Fund said that its Nippon India Small Cap Fund would need 29 days to sell half of its portfolio and 15 days for one-fourth. The February test results showed that the fund house required 27 days to liquidate 50% portfolio and 13 days for 25%. Nippon India’s midcap fund Nippon India Growth Fund would take 8 days to sell 50% portfolio and 4 days to offload 25%. As per the previous test, the fund house needed 7 days and 4 days to wind up 50% and 25% of its midcap fund portfolio, respectively.

Kotak Mutual Fund

Kotak Mutual Fund showed in the March month’s stress test that its Kotak Small Cap Fund would need 34 days and 17 days to liquidate 50% and 25% of portfolio, respectively. In the previous month’s result, the fund house stated that it needed 33 days and 17 days for liquidation of 50% and 25% portfolio of its smallcap fund. Its midcap fund Kotak Emerging Equity Fund would take 30 days to liquidate 50% of the portfolio and 15 days for 25%. Earlier, it would have sold 50% of the midcap fund in 34 days and 25% in 17 days.

Latest AMFI data released for March showed that smallcap schemes witnessed outflows after a gap of 30 months following Sebi’s “off the charts” and “froth” concerns with regard to midcap and small cap space.

For the past many months before Sebi’s warning, the small and mid cap stock had outperfomed major indices. Raising concerns over this, Sebi chief madhabi Puri Buch said there is a need to have an “additional disclosure” regarding risk factors to raise awareness among investors.