SEBI urges investors to inform investors about risks in small, mid-cap funds

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Mumbai: Among the small, mid-cap stocks, the prices of many stocks in the Indian stock markets have become overvalued and in this regard, analysts and experts are warning investors to be careful in new investments. Now the capital market regulator Securities and Exchange Board of India (SEBI) has also urged the asset managers of small and mid cap funds to provide more information to their investors about the risks associated with these funds to protect the interests of investors.

According to a report, small, mid-sized funds have witnessed an extraordinary inflow of investment, so that the regulatory body has become alert as to how the situation can be controlled in case of any major sell-off in the market. Sources have also said that SEBI has also reviewed the stress tests conducted by such funds.

People with knowledge of the matter and a fund manager said that SEBI has asked the fund's asset managers to provide more information to investors about the risks associated with small and mid-cap funds.

Funds should disclose information about how the Funds will meet large redemptions in the event of any potential market crash or sell-off and how these extraordinary outflows-redemptions may affect the value of their portfolios and how much cash and liquid assets they have to meet these large outflows-redemptions. It has been stated.

Meanwhile, the informants say that the investment committees are always aware of the liquidity challenges, but the investors are not aware. Once this information is available to them, they can compare each fund.

The Association of Mutual Funds in India (AMFI), working with SEBI, has suggested a common framework for risk disclosures and disclosures will be made on a regular basis. It may be mentioned that, due to the huge flow of investment, the Nifty Small Cap 250 index has increased by more than 71 percent and the Nifty Mid Cap 1000 index by 64 percent in the last one year. While the Nifty 50 index has increased by 28 percent.

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