Small-cap funds cut liquidity risk even as valuations climb
An analysis of AMFI stress-test data shows smallcap mutual funds shortened the time needed to sell their holdings, even as market valuations rose sharply.
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what happened
An analysis by bl.portfolio, published on TradingView, of liquidity stress-test data from AMFI finds that actively managed small-cap mutual funds lowered their estimated liquidity risk over the past year. Valuations moved the other way: the price-to-earnings ratio of the Nifty Smallcap 250 reached 34.45 at the end of September 2026, against 29.96 a year earlier.
The average time needed to sell half of a portfolio dropped to 11.9 days from 17.6 days. Time for a quarter of a portfolio fell to 6.2 days from nine. Of 31 schemes reviewed, 19 improved, five worsened and seven were unchanged.
The authors link the gains mainly to heavier trading on the NSE, where turnover in these stocks climbed 24% to 31.8 trillion rupees in April to September 2026. Funds also raised their share of larger Nifty 100 names and held more stocks overall.
why it matters
For investors, the findings point to easier exits under normal conditions, but the analysts warn that stress tests do not guarantee quick sales in a sell-off, when trading volumes can dry up sharply.
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sources
- How small-cap funds shed liquidity risk despite rich valuations — ru.tradingview.com, 17 October 2026 at 16:31 UTC
prepared by the newsmetry newsroom with ai assistance from the sources listed below. not investment advice.
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