Investors often focus on returns when selecting mutual funds. However, one important factor that tends to get overlooked is portfolio liquidity—how quickly a fund can sell its holdings if market conditions turn adverse and investors rush to redeem their investments.
The latest AMFI stress test data for April 2026 sheds light on this aspect by estimating the number of days mutual funds may require to liquidate a portion of their portfolios during stressed market conditions.
The results reveal significant differences among mid cap and small cap mutual funds. While some schemes could liquidate 50% of their portfolios within a few days, others may require several weeks due to their large asset size and exposure to less liquid stocks.
What Is AMFI’s Stress Test?
The Association of Mutual Funds in India (AMFI) periodically publishes stress test data for mid cap and small cap mutual fund schemes.
The stress test estimates how many days a scheme would require to liquidate 25% or 50% of its portfolio during stressed market conditions after excluding the least liquid holdings.
A lower liquidation timeline generally indicates relatively higher liquidity, while a higher timeline may indicate that the portfolio could take longer to exit during extreme market conditions.
However, investors should note that higher liquidation timelines do not necessarily indicate poor fund quality. Larger schemes often manage substantial assets and hold positions in companies that may require more time to liquidate during periods of market stress.
Mid Cap Funds Reporting Lower Liquidation Timelines
The following mid cap funds reported relatively lower timelines for liquidating 50% of their portfolios during stressed market conditions.
| Mutual Fund | AUM (₹ Crore) | Days to Liquidate 50% Portfolio |
|---|---|---|
| Tata Mid Cap Fund | 5,605.60 | 2 |
| WhiteOak Capital Mid Cap Fund | 5,300.43 | 2 |
| Mahindra Manulife Mid Cap Fund | 4,688.44 | 2 |
| Canara Robeco Mid Cap Fund | 4,453.08 | 2 |
| PGIM India Midcap Fund | 10,681.27 | 3 |
| ICICI Prudential MidCap Fund | 7,557.30 | 3 |
| Aditya Birla Sun Life Midcap Fund | 6,290.48 | 3 |
These schemes reported relatively shorter liquidation timelines compared to several peers in the category.
Larger Mid Cap Funds With Relatively Lower Liquidation Timelines
Among established mid cap schemes with sizeable assets under management, the following funds reported relatively favourable liquidity profiles.
| Mutual Fund | AUM (₹ Crore) | Days to Liquidate 50% Portfolio |
|---|---|---|
| Edelweiss Mid Cap Fund | 15,810.76 | 4 |
| HSBC Midcap Fund | 13,402.50 | 4 |
| Franklin India Mid Cap Fund | 12,101.48 | 4 |
| UTI Mid Cap Fund | 11,679.28 | 4 |
These funds combine larger AUMs with comparatively lower stress-test liquidation periods.
Mid Cap Funds Reporting Higher Liquidation Timelines
Some mid cap schemes may require considerably more time to liquidate their portfolios during stressed market conditions.
| Mutual Fund | AUM (₹ Crore) | Days to Liquidate 50% Portfolio |
|---|---|---|
| HDFC Mid Cap Fund | 94,793.67 | 45 |
| Kotak Midcap Fund | 63,443.51 | 29 |
| quant Mid Cap Fund | 7,904.71 | 23 |
| SBI Midcap Fund | 23,252.77 | 19 |
The longer liquidation timelines are largely influenced by their sizeable corpus and portfolio composition.
Small Cap Funds Reporting Lower Liquidation Timelines
Small cap funds generally face greater liquidity challenges because small-cap stocks tend to have lower trading volumes.
However, some schemes reported relatively lower liquidation timelines.
| Mutual Fund | AUM (₹ Crore) | Days to Liquidate 50% Portfolio |
|---|---|---|
| Aditya Birla Sun Life Small Cap Fund | 5,263.62 | 5 |
| Mahindra Manulife Small Cap Fund | 4,462.07 | 5 |
| Mirae Asset Small Cap Fund | 4,134.62 | 5 |
| Sundaram Small Cap Fund | 3,542.10 | 6 |
| Edelweiss Small Cap Fund | 5,960.92 | 7 |
| UTI Small Cap Fund | 4,872.57 | 7 |
These schemes reported lower liquidation timelines within the small cap category.
Larger Small Cap Funds With Relatively Lower Liquidation Timelines
Among larger and more established small cap funds, the following schemes reported comparatively lower stress-test timelines.
| Mutual Fund | AUM (₹ Crore) | Days to Liquidate 50% Portfolio |
|---|---|---|
| HSBC Small Cap Fund | 16,392.14 | 10 |
| Franklin India Small Cap Fund | 13,849.93 | 11 |
| Canara Robeco Small Cap Fund | 13,270.54 | 12 |
| Invesco India Smallcap Fund | 11,055.24 | 12 |
| Motilal Oswal Small Cap Fund | 6,208.15 | 12 |
Small Cap Funds Reporting Higher Liquidation Timelines
The following schemes reported higher timelines for liquidating 50% of their portfolios during stressed market conditions.
| Mutual Fund | AUM (₹ Crore) | Days to Liquidate 50% Portfolio |
|---|---|---|
| SBI Small Cap Fund | 37,150.56 | 65 |
| quant Small Cap Fund | 30,373.08 | 65 |
| DSP Small Cap Fund | 17,911.04 | 52 |
| HDFC Small Cap Fund | 38,205.03 | 51 |
| Tata Small Cap Fund | 11,331.77 | 48 |
These figures highlight the liquidity challenges that can arise in large small-cap portfolios during periods of market stress.
Key Observations From AMFI Stress Test 2026
- Mid cap funds generally reported lower liquidation timelines than small cap funds.
- Several smaller and mid-sized schemes could liquidate a significant portion of their portfolios within a few days.
- Larger schemes generally reported longer liquidation timelines because of their sizeable assets under management.
- Stress-test results should be viewed as one component of risk assessment rather than a standalone investment metric.
- Investors should evaluate liquidity data alongside portfolio quality, risk-adjusted performance, consistency and investment objectives.
What Should Investors Take Away From This Data?
The AMFI stress test provides useful insights into how mutual fund portfolios may behave during extreme market conditions.
However, investors should avoid drawing conclusions solely based on stress-test results. A scheme requiring more time to liquidate its portfolio is not necessarily a poor investment option. In many cases, longer liquidation timelines reflect the fund’s large asset base and exposure to a broader universe of stocks.
For long-term investors, stress-test results can serve as an additional risk-management parameter alongside factors such as fund performance, portfolio diversification, fund manager track record and investment strategy.
MyInvestmentIdeas View
The latest AMFI stress test highlights the importance of understanding portfolio liquidity, especially in mid cap and small cap mutual funds where liquidity risk tends to be higher than in large cap funds.
While some schemes reported relatively lower liquidation timelines and others reported significantly higher timelines, investors should use this data as one of several evaluation parameters rather than a standalone basis for investment decisions.
A well-informed investment decision should consider risk profile, investment horizon, portfolio quality, consistency of performance and liquidity characteristics together.
Disclaimer: This article is intended solely for educational and informational purposes. The analysis is based on AMFI stress-test data for April 2026. Mutual fund investments are subject to market risks. Investors should read all scheme-related documents carefully and evaluate their financial goals and risk appetite before investing.
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