India's Largest Small Cap Fund Needs 27 Days to Liquidate Half Its Portfolio; Know Stress Results And Volatility Metrics Of These Funds

Mutual funds in India continue to release stress test results of their mid-cap and small-cap schemes as mandated by the Securities and Exchanges Board of India. Nippon India Small Cap Fund, the country's largest small-cap scheme, requires 27 days to liquidate 50 per cent of its portfolio, whereas smaller funds WhiteOak Midcap Fund just 0.68 days to liquidate half its holdings. The fund houses also released metrics on its volatility or sensitivity to market movements. The stress tests came after concerns expressed by Sebi regarding overvaluation in small-cap and mid-cap schemes. By reading the disclosure of stress test findings, investors can see how soon they can get their money back if the equity markets go red and there is a rush to redeem.

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Nippon India Mutual Fund

Nippon India Small Cap Fund, India's largest small-cap fund with an Asset Under Management (AUM) of Rs 46,044 crore needs a long redemption window. The redemption window is still not the longest on the list. Nippon India's small-cap fund would take 27 days to liquidate 50 per cent of its portfolio and 13 days for 25 per cent liquidation.

The fund features a Portfolio Beta of 0.76, indicating its sensitivity to market movements. A beta of 1 suggests the fund moves in line with the market, while a value above 1 indicates higher volatility. Both mid and small-cap funds of Nippon India boasted beta values below 1. The top 10 investors hold only 0.91 per cent of its assets comparatively lower than many other funds.

Portfolio Annualised Standard Deviation stood at 4.14, which shows the degree of volatility or fluctuations over a specified period, the higher the number higher the reliability. A Standard Deviation of 1 shows 68.27 per cent reliability and 3 shows 99.73 per cent reliability, the fund house said.

Nippon India Growth Fund, the mid-cap offering from the same house needs a 7-day window for 50 per cent liquidation of its portfolio and 4 days for 25 per cent liquidation. The mid-cap offering has a Portfolio Beta of 0.88.

Stress Reports From Other Funds

Edelweiss Mid Cap Fund, with an AUM of Rs 5,066.6 crore revealed that it can liquidate 50 per cent of its portfolio within 2 days and 25 per cent within a single day. The top 10 investors hold 1.56 per cent of its holdings. The fund demonstrated a Portfolio Beta of 0.91.

Similarly, Edelweiss Small Cap Fund, with an AUM of Rs 3,190 crore said would take 3 days to liquidate 50 per cent of its portfolio and 2 days for 25 per cent liquidation. The fund claimed a Portfolio Beta of 0.78.

WhiteOak Mutual Fund also shared the stress test findings for its funds. With an AUM of 1626.54 crore, its mid-cap offering can liquidate 50 per cent of its portfolio within 0.68 days and 25 per cent within just 0.34 days.

Mahindra Manulife in its report shows 0.57 for 50 per cent portfolio liquidation in its mid cap fund and 3.03 days in its small cap offering. For liquidating 25 per cent of its portfolio, the time required is 1.51 days and 0.29 day for the small-cap and mid-cap funds respectively.

Quant Mutual Fund released stress findings and said that it would take 22 days for 50 per cent portfolio liquidation in the Quant Small Cap Fund and 6 days in the Quant Mid Cap Fund. For liquidating 25 per cent of its portfolio, the time required is 11 days and 3 days for the small-cap and mid-cap funds respectively.

Axis Small Cap Fund, with an AUM of Rs 19,606 crore, has stated that it would require 28 days to liquidate 50 per cent of its portfolio. Similarly, DSP Small-Cap Fund, which has an AUM of Rs 13,703 crore as of the end of February, revealed that it would take 32 days to sell half of its portfolio.