Reduce liquidity risk in smallcap, midcap funds with asset allocation

The results of the stress tests conducted by mutual fund houses in their mid and smallcap funds show that liquidity risk is higher in the latter category.

While the bulk of midcap funds that have declared their results will be able to liquidate 25 per cent of their portfolio within three days, only about half of the smallcap funds would be able to do so.

Higher awareness

One positive outcome of the stress test is the increased awareness.

“It has raised awareness at least among some investors that liquidity can be a concern in the mid and smallcap segment during