2nd stress test results: Quant Small Cap Fund's liquidity position improves

Quant Mutual Fund is among the first fund houses to disclose their results for the month ended March 31.

Quant Small Cap Fund, which has assets under management (AUM) of Rs 17,349 crore, has improved the liquidity positions, the second stress test findings revealed on April 12. The scheme will now take 20 days to liquidate 50 percent of its portfolio against 22 days when the first-ever stress tests were done in March.

As mandated by the Securities and Exchange Board of India (SEBI), asset management companies (AMCs) have to disclose the results of the stress test and liquidity, volatility, valuation and portfolio turnover in respect of mid-cap and small-cap equity schemes within 15 days of the end of each month.

SEBI asked all fund houses to determine how long would it take to liquidate 50 percent and 25 percent of their small-cap and mid-cap portfolios.

Quant Mutual Fund is among the first fund houses to disclose their results for the month ended March 31.

As per the latest stress test results, Quant Small Cap Fund would take 10 days to liquidate 25 percent of the portfolio against 11 the previous time.

There has been an increase in the largecap allocation to 30.52 percent against 28.36 percent, while cash allocation has decreased to 4.28 percent from 5.53 percent.

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When it comes to midcap funds, results showed that Quant Mid Cap Fund would take seven days to liquidate 50 percent of the portfolio, an increase of a day from the previous result.

The mutual fund stress-test results are being watched closely, as they saw outflows for the first time in 30 months in March after the capital markets regulator highlighted its concerns over “froth” in the smallercap segments.

Smallcap funds saw net outflows of Rs 94 crore in March against net inflows of Rs 2,922.45 crore in February.

Quant Small Cap Fund, which is the fifth biggest fund in the category, saw the highest net inflows at Rs 156 crore. On the other hand, highest outflows were seen in HDFC Small Cap Fund and Aditya Birla SL Small Cap Fund at Rs 1,025 crore and Rs 938 crore, respectively.

Among other fund houses that disclosed results till April 12 were UTI Mutual Fund and Mahindra Manulife Mutual Fund.

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Mahindra Manulife Small Cap Fund (AUM of Rs 3,557.06 crore) would take four days to sell half of the portfolio, while 25 percent liquation will take two days. UTI Small Cap Fund (AUM of Rs 3,501.59 crore) would take five days to sell 50 percent of the portfolio and three days for 25 percent liquidation.

The stress test results for both these fund houses are on similar lines.

The objective of the test is to make mutual fund investors aware of the risks and impact of market volatility on the liquidity of their equity portfolio to help them make appropriate decisions to rebalance and redirect liquidity and savings.

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