AMCs likely to disclose risk parameters of mid-, small-cap equity MF schemes on their websites

AMCs likely to disclose risk parameters of mid- and small-cap equity MF schemes on websites

The Association of Mutual Funds in India (AMFI), an industry body for asset management companies, issued an advisory to AMCs over disclosure of risk parameters on their websites, reported CNBC-TV18 on February 29 quoting sources. AMCs are likely to disclose risk parameters of mid- and small-cap equity mutual fund schemes on their websites, the channel reported.

AMCs have to disclose result of stress test and liquidity, volatility, valuation and portfolio turnover, reported CNBC-TV18. These risk parameters have to be disclosed within 15 days after each other month, said CNBC-TV18.

For February 2024, disclosures will likely be done by March 15, 2024. Required disclosures are standard deviation, portfolio beta, portfolio trailing PE and portfolio turnover, reported CNBC-TV18.

On February 27, AMFI asked AMCs to moderate inflows into small- and mid-cap funds and protect investors from large outflows, after strong inflows raised concerns of a potential crash.

Following a communication from market regulator Securities and Exchange Board of India (SEBI), AMFI made the request in a letter dated February 27.

India's small- and mid-cap funds have seen high inflows, causing concern among authorities about how they would hold up in the event of a sharp market selloff.

Mutual funds keep between 1% and 5% of their assets as cash to meet outflows but there is no minimum regulatory requirement.

Funds need to invest at least 65% of their assets in small-cap stocks to be categorised as a small-cap fund and the remaining 35% can either be in cash or invested in large-cap stocks. The rule is similar for mid-cap funds.