Mumbai: Mutual funds along with market regulator Sebi has decided to disclose more information related to small- and mid- cap equity schemes’ portfolio risk to investors. Industry body Association of Mutual Funds in India(AMFI) along with Sebi has enhanced the risk metrics and asked fund houses to disclose the result of stress test and liquidity, volatility, valuation and portfolio turnover in respect of small-and mid-cap equity schemes.
These disclosures would have to made on the asset management companies website, as well as on AMFI's website on a monthly basis within 15 days after each month, starting with disclosure for the month of February, 2024 by March 15.
“It is done given the in equity market is quiet substantial, one must know the risk associated with this segment of the market which lacks liquidity due to not so high trading volumes,” said an AMFI official. “These measures will provide sufficient information so that investments are made for longtermrather than coming for short-term after knowing the serisk paramet ersassociated with individual fund house portfolios,” official said.
To gauge portfoho liquidity under a stress scenario for small-and midcap funds, certain assumptions and methodology have been proposed to ascertain number of days required to liquidate 50% and 25% of the portfolio. Stress scenario would be defined as one wherein only 10% of market participation is available to any single scheme of a mutual fund.
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