Mutual Funds stress test result: 6 days required for 50% portfolio liquidation of Quant Mid Cap Fund

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Quant Small Cap Fund and 6 days in the Quant Mid Cap Fund. For 25% liquidation, the timeframes are 11 days and 3 days for the small-cap and mid-cap funds respectively. “Our Predictive Analytics tools endorse that there are no classic signs of euphoria in Indian equities at this point," said Quant MF.

While there are areas of high valuation and excitement in certain parts of our market, we don't see significant risks in the mid and small-cap sectors. We continue to invest across market segments following our risk-mitigating VLRT investment framework and our "Active, Absolute & Unconstrained" investment philosophy. The trailing-twelve-month price-to-earnings (P/E) ratio for the benchmark Mid Cap 150 index is only slightly higher than it was one or two years ago.

Although the benchmark Small Cap 250 index is trading above its level from a year ago, it's close to where it was two years ago, the fund house noted. The data was made public following a directive from the Association of Mutual Funds in India (AMFI) and the Securities and Exchange Board of India (SEBI). They instructed asset management companies (AMCs) to perform stress tests on small and mid-cap schemes and share the outcomes by March 15.

As per the directive, the stress test needs to be conducted every 15 days, commencing from March 15. The results must be published on the AMCs' websites as well as on the AMFI's website. The purpose of this stress testing, conducted by AMFI on behalf of the regulator, is to educate mutual fund investors about the risks associated with market volatility and its impact on the liquidity of their equity portfolios.