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Small-cap fund stress test: Schemes with greater midcap exposure fare better on liquidity
8 min read | Updated on August 26, 2026, 13:52 IST
SUMMARY
On valuations, the data shows that most small-cap funds are trading at premiums to their benchmarks.
Funds with larger AUMs may take longer to liquidate.
AMFI's small-cap fund stress test data for July 2026 reveals an interesting pattern: Schemes having a larger allocation to midcap stocks tend to fare better on liquidity stress tests, meaning they can liquidate their portfolios faster in a hypothetical redemption scenario.
The stress test data by the Association of Mutual Funds in India (AMFI) measures how many days a fund would need to liquidate 50% and 25% of its portfolio. The July 2026 data covers 28 small-cap funds with combined assets under management of approximately ₹4.5 lakh crore as of July 1, 2026.
Insights from the July stress test data
At one end of the spectrum is a scheme like Samco Small Cap Fund. With a midcap allocation of 22.41%, this fund could liquidate 50% of its portfolio in just 0.06 days and 25% in 0.03 days.
ITI Small Cap Fund, with 24.51% in midcaps, the highest among all funds in the list, can liquidate both the 50% and 25% of its assets in one day.
TRUSTMF Small Cap Fund, with 21.9% in midcaps, also scored 1 day on both tests. PGIM India Small Cap Fund, with 19.97% in midcaps, scored 1 day on both metrics.
At the other end there are scheme like quant Small Cap Fund. With only 8.81% in midcaps and 65.06% in small caps, the scheme needed 48 days to liquidate 50% of its portfolio and 24 days for 25%. Similarly, SBI Small Cap Fund, with just 5.06% in midcaps and 83.87% in small caps, required 46 days for 50% liquidation and 23 days for 25%.
Tata Small Cap Fund, with 8.09% in midcaps and 85.08% in small caps, took 37 days and 19 days respectively in the stress test. The DSP Small Cap Fund, with 5.76% in midcaps and 81.6% in small caps, needed 31 days for 50% liquidation and 15 days for 25%.
The correlation is visible across the middle of the pack as well. Edelweiss Small Cap Fund, with 23.17% in midcaps, scored five days for 50% liquidation. HSBC Small Cap Fund, with 22.19% in midcaps, scored nine days. Mahindra Manulife Small Cap Fund, with 20.99% in midcaps, scored five days. UTI Small Cap Fund, with 18.49% in midcaps, scored four days.
In contrast, funds with low midcap exposure and high small-cap take longer durations for liquidations under stress. ICICI Prudential Smallcap Fund, with just 2.89% in midcaps and 88.5% in small caps, needed 12 days for 50% liquidation. Franklin India Small Cap Fund, with 5.2% in midcaps and 81.4% in small caps, also took 12 days.
AUM size compounds liquidity challenge
The data also reveals that AUM size compounds the liquidity challenge. Among funds with over ₹30,000 crore in AUM, HDFC Small Cap Fund (₹41,677.76 crore) needed 44 days, SBI (₹39,942.33 crore) needed 46 days, and quant (₹34,065.10 crore) needed 48 days for liquidating 50% of portfolio.
Bandhan Small Cap Fund, with ₹31,157.09 crore, scored 21 days. Nippon India Small Cap Fund, the largest in the category with ₹78,943.52 crore, needed 26 days, but it also carried 14.5% in large caps and 13.22% in midcaps, which helped moderate its liquidation timeline.
On valuations, the data shows that most small-cap funds are trading at premiums to their benchmarks. Bajaj Finserv Small Cap Fund had the highest portfolio trailing 12-month PE at 49.2, against a benchmark PE of 35.68. Bandhan Small Cap Fund had the lowest portfolio PE at 19.5, well below its benchmark of 35.68.
AMFI July 2026 stress test data
| Scheme Name | AUM (₹ Cr) | 50% Portfolio (Days) | 25% Portfolio (Days) | Large Cap (%) | Mid Cap (%) | Small Cap (%) | Cash (%) |
|---|---|---|---|---|---|---|---|
| Abakkus Small Cap Fund | 2,129.42 | 2.00 | 1.00 | 5.84 | 3.25 | 78.91 | 12.00 |
| Aditya Birla Sun Life Small Cap Fund | 5,863.78 | 4.00 | 2.00 | 2.04 | 12.73 | 80.52 | 4.71 |
| Axis Small Cap Fund | 30,086.99 | 15.00 | 7.00 | 8.47 | 10.50 | 73.53 | 7.50 |
| Bajaj Finserv Small Cap Fund | 2,366.08 | 3.00 | 2.00 | 0.05 | 10.80 | 87.52 | 1.63 |
| BANDHAN Small Cap Fund | 31,157.09 | 21.00 | 11.00 | 6.33 | 12.30 | 71.46 | 9.92 |
| BANK OF INDIA SMALL CAP FUND | 2,834.29 | 3.00 | 2.00 | 2.80 | 8.11 | 77.13 | 11.96 |
| Baroda BNP Paribas Small Cap Fund | 1,286.94 | 1.00 | 1.00 | 6.23 | 14.39 | 73.27 | 6.10 |
| Canara Robeco Small Cap Fund | 14,223.79 | 10.00 | 5.00 | 9.30 | 14.77 | 72.96 | 2.97 |
| DSP Small Cap Fund | 20,089.50 | 31.00 | 15.00 | 0.00 | 5.76 | 81.60 | 12.64 |
| Edelweiss Small Cap Fund | 6,824.59 | 5.00 | 2.00 | 5.70 | 23.17 | 67.96 | 3.17 |
| Franklin India Small Cap Fund | 14,460.20 | 12.00 | 6.00 | 9.10 | 5.20 | 81.40 | 4.30 |
| Groww Small Cap Fund | 578.52 | 0.64 | 0.16 | 0.00 | 7.74 | 69.23 | 23.03 |
| HDFC Small Cap Fund | 41,677.76 | 44.00 | 22.00 | 6.77 | 10.76 | 72.50 | 9.96 |
| Helios Small Cap Fund | 1,459.89 | 1.00 | 1.00 | 3.88 | 17.95 | 77.24 | 0.93 |
| HSBC Small Cap Fund | 17,781.69 | 9.00 | 5.00 | 2.90 | 22.19 | 72.71 | 2.20 |
| ICICI Prudential Smallcap Fund | 9,534.50 | 12.00 | 6.00 | 5.85 | 2.89 | 88.50 | 2.75 |
| Invesco India Smallcap Fund | 14,521.81 | 14.00 | 7.00 | 13.69 | 14.96 | 65.49 | 5.86 |
| ITI Small Cap Fund | 3,450.65 | 1.00 | 1.00 | 8.91 | 24.51 | 64.34 | 2.24 |
| JM Small Cap Fund | 869.01 | 1.00 | 1.00 | 0.00 | 3.32 | 94.26 | 2.42 |
| Kotak Small Cap Fund | 18,908.54 | 24.00 | 12.00 | 7.21 | 19.06 | 73.49 | 0.24 |
| LIC MF Small Cap Fund | 758.14 | 2.00 | 1.00 | 1.83 | 6.19 | 88.10 | 3.89 |
| Mahindra Manulife Small Cap Fund | 5,086.65 | 5.00 | 3.00 | 9.70 | 20.99 | 64.21 | 5.10 |
| Mirae Asset Small Cap Fund | 5,229.22 | 5.00 | 3.00 | 6.33 | 16.28 | 76.94 | 0.45 |
| Motilal Oswal Small Cap Fund | 7,611.55 | 9.00 | 5.00 | 1.00 | 9.00 | 87.00 | 3.00 |
| Nippon India Small Cap Fund | 78,943.52 | 26.00 | 13.00 | 14.50 | 13.22 | 69.47 | 2.81 |
| PGIM India Small Cap Fund | 1,673.53 | 1.00 | 1.00 | 8.45 | 19.97 | 68.83 | 2.74 |
| quant Small Cap Fund | 34,065.10 | 48.00 | 24.00 | 20.62 | 8.81 | 65.06 | 6.17 |
| QUANTUM SMALL CAP FUND | 254.39 | 1.00 | 1.00 | 9.64 | 4.22 | 80.09 | 6.05 |
| Samco Small Cap Fund | 170.58 | 0.06 | 0.03 | 5.40 | 22.41 | 70.68 | 1.51 |
| SBI Small Cap Fund | 39,942.33 | 46.00 | 23.00 | 1.02 | 5.06 | 83.87 | 10.05 |
| Sundaram Small Cap Fund | 3,924.56 | 5.00 | 3.00 | 9.33 | 4.84 | 80.64 | 5.19 |
| TATA SMALL CAP FUND | 12,690.55 | 37.00 | 19.00 | 0.00 | 8.09 | 85.08 | 6.83 |
| THE WEALTH COMPANY SMALL CAP FUND | 106.76 | 1.00 | 1.00 | 15.01 | 9.54 | 71.63 | 3.81 |
| TRUSTMF Small Cap Fund | 2,871.41 | 1.00 | 1.00 | 2.40 | 21.90 | 71.89 | 3.81 |
| Union Small Cap Fund | 2,404.78 | 1.00 | 1.00 | 4.40 | 16.43 | 77.84 | 1.33 |
| UTI Small Cap Fund | 5,261.79 | 4.00 | 2.00 | 0.00 | 18.49 | 81.51 | 0.00 |
When evaluating a small-cap fund, the midcap allocation could be a useful indicator of how well the fund can handle heavy redemptions during stress. AMFI's July data shows that funds that keep a fifth or more of their corpus in midcaps appear better positioned to meet the stress test, while those parked almost entirely in small-cap stocks could take longer to liquidate, more so when their AUM is large.
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