Midcap and smallcap funds stress test results: After a month of disclosing stress test results for their mid- and smallcap portfolios following regulator SEBI’s “froth” concerns, asset management companies have come out with March month’s data showing how prepared they are to meet liquidity challenges in case 50% or 25% of their mid and smallcap portfolios need to be offloaded.

Fund houses are required to disclose stress test results on their mid and smallcap schemes on 15th of every month. The first test results were out in March capturing February data.

Compared with the test results of first round, the data for March showed a slight improvement. If you look at the stress test data of top 10 smallcap funds in terms of assets under management, five of them improved and three slipped on number of days they would take to liquidate half and one-fourth of their portfolios.

Also Read: Small and Midcap Funds Stress Test: How India’s top 5 fund houses performed in 2nd round – Details here

Top gainers in the smallcap stress test results

SBI Small Cap Fund, Axis Small Cap Fund, Quant Small Cap Fund, HSBC Small Cap Fund, Tata Small Cap Fund showed good improvement as data suggests that all these funds would now take lesser number of days to liquidate 50% and 25% of their schemes than what they needed earlier.

Major laggards in the smallcap stress test results

On the other hand, India’s biggest smallcap fund in terms of AUM, Nippon India Small Cap Fund, slipped. Now the fund would need 29 days and 15 days to liquidate its 50% and 25% portfolios, respectively, against 27 days and 13 days earlier.

HDFC Small Cap Fund would need 44 days and 22 days to liquidate 50% and 25% of its portfolio against 42 days and 21 days earlier.

Kotak Small Cap Fund would need 34 days to offload 50% of its portfolio against 33 days earlier. To wind up 25% of its portfolio, the fund would take 17 days, same as earlier.

ICICI Prudential Smallcap Fund too slipped, showing that it would need 11 days and 6 days to wind up 50% and 25% of its portfolio against 10 days and 5 days earlier.

DSP Small Cap Fund showed no change in stress test results from the last round.

Here’s how to check how your funds performed on the stress test on funds mandated by SEBI:

  • Go to AMFI website – AMFI India.
  • Click “Important Updates” tab on the left-hand side.
  • Click on ‘Disclosure of Stress Test & Liquidity Analysis in respect of Mid Cap & Small Cap Funds’.
  • Select ‘Month’ from the drop-down menu.
  • Choose category: ‘midcap’ or ‘smallcap’.
  • Hit ‘Go’ button.
  • Disclosure of Stress Test & Liquidity Analysis for Mar-2024 will open.

AMCs have been asked to conduct stress tests on their midcap and smallcap funds every month with SEBI being concerned about excessive valuations in mid and smallcap funds.

As part of the stress test, AMCs will determine how many days they would need to liquidate 25% and 50% of the portfolios of smallcap and midcap funds if faced with challenging market scenario where investors rush to sell their fund units.