MF Stress Test Results For March: Most AMCs Reduce Time To Liquidate Positions
Four of the top 10 small-cap funds have reduced the days for liquidating their schemes.
Asset management companies have disclosed their second round of stress test results for mid- and small-cap stocks for March, with most AMCs reducing the days to liquidate their funds.
Four of the top 10 small-cap funds have reduced the days for liquidating their funds, while three of them have increased their time to exit their positions. This is according to the stress-test levels disclosed by the AMCs on the Association of Mutual Funds in India website.
Results for the 10 mid-cap funds showed a mixed picture, with three funds increasing and three more decreasing the number of days to liquidate their holdings.
Key Takeaways For Small-Cap Funds
Four of the top 10 AMCs improved on their days to liquidate their funds (SBI Small Cap Fund, Axis Small Cap Fund, Quant Small Cap Fund, HSBC Small Cap Fund, and Tata Small Cap Fund).
Three of the top 10 AMCs increased their days to exit their positions (Nippon India Small Cap Fund, Kotak Small Cap Fund, and ICICI Prudential Smallcap Fund).
ICICI Prudential Smallcap Fund showed no change in the number of days, while HDFC Small Cap Fund was yet to report at the time of publishing this copy.
The biggest change was seen in Tata Small Cap Fund, with a decrease of three and six days to liquidate 25% and 50%, respectively.
Excluding Tata Small Cap Fund, all the changes were between (+/-) two days.
Key Takeaways For Mid-Cap Funds
Three of the top 10 AMCs improved on their days to liquidate their funds (Kotak Emerging Equity Fund, Axis Midcap Fund, and DSP Midcap Fund).
Three of the top 10 AMCs increased their days to exit their positions. (Nippon India Growth Fund, SBI Magnum Midcap Fund and PGIM India Midcap Opportunities Fund).
Two funds showed no change in the number of days (Sundaram Mid Cap Fund, UTI Mid Cap Fund).
The biggest change was seen in the Kotak Emerging Equity Fund, with an increase of two and four days to liquidate 25% and 50%, respectively.
Excluding Kotak Emerging Equity Fund, all the changes were between (+/-) two days.
Why Mutual Funds Have To Do Stress Test
As the Securities and Exchange Board of India wants stringent monitoring of schemes for potential risks involving froth in the market, all asset management companies with small- and mid-cap schemes must undertake stress testing of their portfolios.
The move follows the market regulator's communication with AMFI over the rising flows into such schemes. For the first time in 30 months, small-cap mutual funds turned negative during March. The overall net flows across mutual funds have recorded an outflow of Rs 1.59 lakh crore.
This stress test is based on AMFI's prescribed methodology to test liquidity that was stipulated at the end of February. These disclosures are in addition to the 'risk-o-meter' disclosed along with the schemes.
The results of the stress test should be disclosed by the 15th of every month. But the market regulator will not interfere in the functioning of AMCs and their business decisions, it said.
