Nippon Mutual Fund has disclosed that it would take 27 days to liquidate 50% of the portfolio of its small-cap fund and 13 days to liquidate 25%, based on the Association of Mutual Funds in India's prescribed methodology to test liquidity.
The mutual fund disclosed that it would take seven days and four days, respectively, to liquidate 50% and 25% of its midcap scheme portfolio.
The disclosure on the mid- and small-cap schemes is based on a notice sent by the industry body AMFI to mutual fund trustees at the behest of the Securities and Exchange Board of India, amid concerns on valuations and rally in the small-cap stocks. The disclosure is meant to inform investors about potential risks.
The Nippon's mid-cap fund has an assets under management of over Rs 24,400 crore whereas the small cap fund has an AUM of over Rs 46,000 crore as of Feb 29, making it the largest in its category.
“Holdings of large, mid, and small cap stocks and cash are 18.4%, 66.7%, 13.5% and 1.36%, respectively, in the Nippon Growth Fund and 13.46%, 14.6%, 67.5% and 4.4%, respectively, in the Nippon Small Cap Fund," as per the disclosed results.
Top-10 investors hold only 1.5% in the Nippon Growth Fund and only 0.9% in the Nippon India Small Cap Fund.
Nippon Mutual Fund had stopped lump-sum inflows into its small-cap schemes last year on the back of unprecedented inflows into categories.
Small-cap funds have a minimum requirement of 65% of allocation under the category, according to the SEBI guidelines.
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