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Sebi stress test: Nippon India, biggest smallcap fund, will take this long to sell off portfolio
Nippon India stress test: SEBI wanted funds to disclose the time it would take to liquidate 50% and 25% of their smallcap and midcap portfolios.
Nippon India Mutual Fund (MF) released its first stress test report of smallcap and midcap schemes. It manages the largest smallcap fund with assets under management of ₹46,044 crore and released results of the stress test after Sebi instructed funds to disclose them following concerns over build-up of froth in small- and mid-cap funds. SEBI wanted funds to disclose the time it would take to liquidate 50% and 25% of their smallcap and midcap portfolios.
What indicates stress? If a fund takes takes longer than the two to three days to return investors' money, it suggests stress in the portfolio.
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What Nippon Fund results show?
Nippon Mutual Fund disclosed it would take 27 days to liquidate 50% of the portfolio of its small-cap fund. To liquidate 25%, it would take 13 days, the mutual fund in a statement. In its midcap scheme portfolio, it said that it would take seven days and four days, respectively, to liquidate 50% and 25% of the fund.
“Holdings of large, mid, and small cap stocks and cash are 18.4%, 66.7%, 13.5% and 1.36%, respectively, in the Nippon Growth Fund and 13.46%, 14.6%, 67.5% and 4.4%, respectively, in the Nippon Small Cap Fund," it said.
Read more: Sebi stress test: What is it, what are the results and impact on markets
Among others, Edelweiss Mutual Fund revealed that the time taken for similar liquidation was two days for small-cap funds and one day for mid-cap funds while Quant Mutual Fund said it will take 11 days to liquidate a quarter of its small-cap portfolio and three days for its mid-cap portfolio.
