As required by the Securities and Exchanges Board of India, mutual funds in India keep disclosing the outcomes of their stress tests for their small- and mid-cap plans. The largest small-cap plan in the nation, Nippon India Small Cap Fund, takes 27 days to sell 50% of its assets, whereas smaller funds, like WhiteOak Midcap Fund, only need 0.68 days to do the same.
Metrics on the fund houses' volatility and sensitivity to changes in the market were also disclosed. The stress tests were implemented in response to Sebi's worries over small- and mid-cap schemes' overvaluation. Investors can learn how quickly they can get their money back in the event that the equities markets go red and there is a rush to redeem by reading the disclosure of stress test results.
Mutual Fund Nippon India
With an Asset Under Management (AUM) of Rs 46,044 crore, the Nippon India Small Cap Fund is the largest small-cap fund in India and requires a lengthy redemption period. On the list, the redemption window is still not the longest. It would take 27 days for Nippon India's small-cap fund to sell half of its assets, and 13 days for the remaining 25%.
The fund's 0.76 Portfolio Beta indicates how sensitive it is to changes in the market. A beta of one indicates that the fund moves in lockstep with the market, whereas a value greater than one denotes increased volatility. Nippon India's mid-cap and small-cap funds both had beta values that were less than 1. Compared to many other funds, just 0.91 percent of its assets are held by the top 10 investors.
The Portfolio Annualized Standard Deviation, which indicates the level of volatility or swings over a given period, was 4.14. The higher the number, the more reliable the information. According to the fund company, a Standard Deviation of 1 indicates 68.27 percent reliability, while a 3 indicates 99.73 percent reliability.
The same company's mid-cap offering, Nippon India Growth Fund, requires a 7-day window for a 50% portfolio liquidation and a 4-day window for a 25% liquidation. The Portfolio Beta for the mid-cap product is 0.88.
Reports on Stress from Other Funds
With an AUM of Rs 5,066.6 crore, Edelweiss Mid Cap Fund disclosed that it may sell 25% of its portfolio in a single day and 50% of its portfolio in two days. One fifth of its holdings are owned by the top ten investors. The portfolio beta of the fund was 0.91.
In a similar vein, the Rs 3,190 crore AUM Edelweiss Small Cap Fund projected that it would take three days to sell fifty percent of its assets and two days for the remaining twenty-five percent. According to the fund, its Portfolio Beta was 0.78.
The results of the stress test for its funds were likewise disclosed by WhiteOak Mutual Fund. Its mid-cap offering, which has an AUM of 1626.54 crore, can sell 50% of its portfolio in 0.68 days and 25% in just 0.34 days.
In a release of stress findings, Quant Mutual Fund stated that 50% portfolio liquidation in the Quant Small Cap Fund would take 22 days, and for the Quant Mid Cap Fund, it would take 6 days. It takes 11 days for the small-cap fund and 3 days for the mid-cap fund to liquidate 25% of their holdings, respectively.
With an AUM of Rs 19,606 crore, the Axis Small Cap Fund has said that it will take 28 days to dispose half of its holdings. Similarly, the DSP Small-Cap Fund said that selling half of its portfolio will take 32 days, with an AUM of Rs 13,703 crore as of the end of February.
