NEW DELHI: A day before AMFI’s mandate, prominent fund houses have released their first stress test report to show they will take longer time to liquidate their mid-cap and small-cap schemes.
A few asset managing companies (AMCs) have given a detailed analysis of where and in which category their fund is parked. They are releasing data such as volatility of the scheme and valuation which compares the portfolio PE (price-to-earning) with the benchmark PE and portfolio turnover which is a measure of how frequently assets within a mutual fund scheme are bought and sold by a fund manager over a given period of time. The fund houses have disclosed a few other additional risk-adjusted measures.
The stress test evaluate the liquidity of a scheme by calculating the time required to sell off 25% and 50% of its holdings. This result would allow investors to see how long they can get their money back if the equity market crashes.
As per third-party estimates, most fund houses will take anywhere between 3 days to 111 days to liquidate their small-cap schemes. As per data sourced by industry players, it will take SBI Mutual Fund 111 days to liquidate SBI Small Cap Fund scheme. This scheme had an asset under management (AUM) of Rs 24,862 crore as of January 2024. It would take 29 days for the HDFC Small Cap Fund (AUM: Rs 28,604 crore) scheme to liquidate.
Quant Mutual Fund on Thursday said the time taken for 50% portfolio liquidation is six days for its Quant Mid Cap Fund and 22 days for Quant Small Cap Fund. Further, the time taken for 25% portfolio liquidation is 3 days for Quant Mid Cap Fund and 11 days for Quant Small Cap Fund.
Nippon India Mutual Fund (MF) said it would require up to 27 days to liquidate 50% of the small-cap fund portfolio and 13 days to offload 25% of the assets. Nippon manages India’s largest small-cap fund with AUM of Rs 46,044 crore.
Third-party data shows schemes such as HSBC Fund, Franklin India Smaller Companies Fund, Canara Robeco Small Cap Fund, ICICI Prudential Small Cap Fund and Aditya Birla Sun Life Small Cap Fund would take less than 10 days to sell their portfolio, showed the data.