Small cap fund can liquidate 100% portfolio in one day: Quantum AMC stress test report

New Delhi [India], March 16 : Quantum AMC's Small Cap Fund has disclosed that the fund house would be able to liquidate its 100 per cent of portfolio holdings within one day, based on the Association of Mutual Funds in India's prescribed methodology to test liquidity.

Association of Mutual Funds in India has recently mandated fund houses to perform stress tests on their mid- and small-cap schemes using data from the previous month. These findings were to be disclosed by March 15, 2024.

Abhilasha Satale, Fund Manager- Equity, Quantum AMC, said the fund has 70.31 per cent holding in Small Caps, 8.25 per cent in large caps, 2.54 per cent in mid-caps and 18.9 per cent in cash and liquid securities.

"Stress test is prudent way of making investors aware about the risks involved in their investments," Satale said in a brief note.

"Even before SEBI issued this directive, at Quantum we have been following a robust investment framework with guardrails around liquidity and market cap ownership that defines the capacity to which the fund can scale without compromising the portfolio characteristics and liquidity traits," Satale added.

Satale said the fund house has a liquidity filter of Rs 2 crores of minimum average liquidity for the stocks over last 12 months.

Investing in Indian markets since 1990, Quantum AMC, over the years, apart from India public equities, the company has built capabilities and or created partnerships across other Indian asset classes like fixed income, real estate and private equity.

Several other fund houses also released the results of their respective stress test, ahead of the deadline.

The move seeking stress tests comes on the back of market regulator SEBI's concern in what it said is "froth" in some of the schemes.

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